SMM Morning Comments (Dec 2): Shanghai base metals mostly declined, the LME complex mixed

SHANGHAI, Dec 2 (SMM) — Nonferrous metals on the SHFE were mostly lower on Wednesday morning, while their counterparts on the LME set for a mixed start.

Shanghai base metals closed mixed in overnight trading. Copper inched up 0.03%, aluminium rose 1.41% and tin advanced 0.25%, while zinc shed 0.33%, lead fell 1.27% and nickel weakened 0.14%.

The LME complex rose for the most part. Copper rose 1.77%, aluminium added 0.91%, lead climbed 0.27%, nickel increased 1.06% and tin advanced 0.78% while zinc underperformed with a 0.16% loss.

Copper: Three-month LME copper increased 1.77% to close at $7,700/mt on Tuesday after recording a new high in 2020 at $7,743/mt earlier in the session. It is expected to trade between $7,650-7,730/mt today.

The most-active SHFE 2101 copper contract inched up 0.03% to settle at 57,340 yuan/mt in overnight trading. It is likely to move between 57,100-57,600 yuan/mt today, and spot premiums will be seen lower at 120-170 yuan/mt.

Overnight, sentiment got a boost after a group of US lawmakers unveiled a $908 billion stimulus plan, which includes more than $200 billion in Paycheck Protection Program small business loans. In addition, manufacturing activities continued to expand in both China and the US according to data released yesterday, and this, together with positive progress in coronavirus vaccines, lifted market sentiment. The US dollar index plunged to its lowest in more than two and a half years overnight, which also supported copper prices.

Zinc: Three-month LME zinc weakened 0.16% to end at $2,774/mt in choppy trading on Tuesday. Zinc stocks across LME-listed warehouses dipped 125 mt or 0.06% to 220,500 mt. Overnight data showed that manufacturing activities in Europe, the US and Asia expanded rapidly, and this, combined with expectations of further fiscal stimulus from the US and a solid global economy recovery, is likely to further boost zinc prices in the near term. LME zinc is expected to trade between $2,750-2,800/mt today.

The most-traded SHFE 2101 zinc contract came off an intraday high of 21,475 yuan/mt to an intraday low of 21,125 yuan/mt in overnight trading before recouping some losses to end 0.33% lower at 21,340 yuan/mt, with open interest rising 1,318 lots to 98,784 lots. Demand from galvanising producers weakened amid a traditional low season and strict environmental inspections, but upbeat macroeconomic data and positive Covid-19 vaccine news may further boost SHFE zinc. The January contract is likely to move between 21,100-21,600 yuan/mt today, and spot premiums for domestic 0# Shuangyan will be seen stable at 130-140 yuan/mt over the December contract.  

Nickel: The most-liquid SHFE 2102 nickel contract settled 0.14% weaker at 120,380 yuan/mt in overnight trading, with open interest rising 4,914 lots to 158,000 lots. Whether the contract would steady above the 120,000 mark today will be monitored.

Lead: Three-month LME lead climbed to an intraday high of $2,104.5/mt before giving up some gains to end 0.27% higher at $2,069/mt on Tuesday.

The most-active SHFE 2101 lead contract closed 1.27% lower at 15,140 yuan/mt in overnight trading, after earlier hitting a more than one-week low of 14,980 yuan/mt. As of last week, lead stocks at SHFE-listed warehouses expanded for seven straight weeks amid tepid downstream consumption, but firm battery scrap prices, sliding US dollar index and positive Caixin manufacturing data supported lead prices. The January contract is expected to continue to fluctuate at high levels today.

Tin: Three-month LME tin rose 0.78% to end at $18,825/mt on Tuesday. A weaker US dollar was supportive to tin prices. LME tin is likely to trade between $18,500-19,000/mt today.

The most-liquid SHFE 2102 tin contract added 0.25% to end at 146,360 yuan/mt in overnight trading, and support below will be seen from around 145,000 yuan/mt today.