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SMM Morning Comments (Nov 18): Shanghai base metals performance mixed as investor caution prevails
Nov 18,2020 09:38CST
Source:SMM
Shanghai base metals traded mixed on Wednesday morning, as investor caution prevailed with coronavirus cases continuing to surge despite vaccine hopes. Meanwhile, their counterparts on the LME were mostly higher.

SHANGHAI, Nov 18 (SMM) — Shanghai base metals traded mixed on Wednesday morning, as investor caution prevailed with coronavirus cases continuing to surge despite vaccine hopes. Meanwhile, their counterparts on the LME were mostly higher.

Shanghai base metals closed mixed in overnight trading. Copper slid 0.89%, lead declined 0.41% and nickel weakened 1.14%, while aluminium climbed 0.85%, zinc rose 0.69% and tin increased 0.69%.

The LME complex rose for the most part. Lead was the best performer with a rise of 2.02%. Tin advanced 1.79%, aluminium edged up 1.48%, zinc increased 0.9% and nickel went up 0.06%, while copper fell 0.29%.

Copper: Three-month LME copper fell 0.29% to end at $7,074.5/mt on Tuesday, and is likely to trade between $7,040-7,100/mt today.

The most-active SHFE 2012 copper contract went down 0.36% to close at 52,720 yuan/mt in overnight trading, and it is expected to move between 52,400-52,900 yuan/mt today, while spot premiums will be seen at 140-190 yuan/mt.

One million new cases of COVID-19 have been confirmed in the past week in the US, and the pandemic has spread faster than the peak period in April. At present, many States in the US have strengthened preventive measures and even re-issued home quarantine orders. US stocks fell from a high level at night, investors worried about the continued impact of the new round of pandemic prevention blockade on economic recovery, and the optimistic expectations of the market for COVID-19 vaccine cooled down, while copper futures dropped slightly at night. The fundamentals will give certain support to premiums and discounts in the near term.

Aluminium: Three-month LME aluminium rose 1.48% to close at $1,982/mt on Tuesday, with open interest falling to 743,000 lots. It is expected to trade between $1,950-2,000/mt today. 

The most-liquid SHFE 2012 aluminium contract climbed 0.78% to settle at 15,510 yuan/mt on Tuesday night, and is likely to trade between 15,300-15,700 yuan/mt today.

Zinc: Three-month LME zinc rose 0.9% to close at $2,700/mt on Tuesday. Zinc stocks at LME-listed warehouses fell 375 mt to 220,475 mt. Overnight, LME zinc reached a new high, the weakness of the US dollar provided support for zinc prices with the optimism of COVID-19 vaccine. The market predicted that the Federal Reserve and the US Congress are likely to take more measures to alleviate the economic impact of the COVID-19. However, the overseas pandemic surged, causing the US retail sales in October to fall short of expectations and possibly slow down further, which is expected to limit the upside space of LME zinc. It is likely to trade between $2,660-2,710/mt today.

The most-liquid SHFE 2012 zinc contract added 0.69% to end at 20,490 yuan/mt in overnight trading. Under macro optimism, the tight supply at the ore end and the high spot premium provide support for zinc prices, but the limited production of environmental protection in North China is expected to limit the upside space of the contract. The December zinc contract is expected to move between 20,100-20,600 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 160-180 yuan/mt.

Nickel: The most-active SHFE 2102 nickel contract fell 1.14% to close at 116,720 yuan/mt on Tuesday as stainless steel spot continued to fall. Open interests fell 222 lots to 160,000 lots. The contract will test pressure from 117,000 yuan/mt today.

Lead: Three-month LME lead rose 2.02% to end at an intraday high at $1,948/mt on Monday. LME lead rose for six consecutive days. Optimism about the second vaccine boosted the market, but the outlook of the US dollar was still not optimistic. The impact of overseas pandemic prevention and control progress on the prices of base metals will continue to be monitored.

The most-active SHFE 2101 lead contract trended lower on Tuesday night, ending 0.27% lower at 14,580 yuan/mt. The downstream trade in the domestic spot market remains weak. The contract is expected to keep fluctuating in the near term.

Tin: Three-month LME tin closed up 1.79% at $19,000/mt on Tuesday. The US dollar is still dragged down by the optimism about the second vaccine, and the outlook of the US dollar is still not optimistic. Moreover, the market expects that the Federal Reserve and the US Congress may take more measures to alleviate the impact of the COVID-19 on the economy. The continuous decline of the US dollar, coupled with the favorable supply and demand data of tin provided by the global tin market, supported LME tin to return to $19,000 /mt. The contract will test support from $19,000 /mt and is expected to trade around $19,000 /mt. The guidance of the trend of the US dollar on LME tin will come under scrutiny.

The most-liquid SHFE 2101 tin contract closed up 1.73% at 151,070 yuan/mt on Tuesday night. The guidance provided by LME zinc and the flow of funds will be monitored in the near term. Pressure above will be seen from 152,000 yuan/mt today. Support below will be seen from 147,000 yuan/mt today.

Market comments
Copper
Aluminium
Zinc
Nickel
Lead
Tin

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