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SMM Morning Comments (Dec 4): Shanghai base metals were mostly lower, the LME complex mostly higher
Dec 4,2020 10:00CST
SMM Comments
Source:SMM
Shanghai base metals fell broadly on Friday morning, while their counterparts on the LME mostly cruised higher.

SHANGHAI, Dec 4 (SMM) — Shanghai base metals fell broadly on Friday morning, while their counterparts on the LME mostly cruised higher.

Shanghai base metals were mostly lower in overnight trading. Aluminium declined 2.4%, zinc slid 0.33%, lead weakened 0.2% and nickel fell 0.64%, while copper inched up 0.05% and tin advanced 0.25%.

The LME complex closed mixed on Thursday. Copper slipped 0.21%, aluminium fell 2.23% and lead weakened 0.93%, while zinc added 0.31%, nickel edged up 0.06% and tin firmed 0.64%.

Copper: Three-month LME copper weakened 0.21% to close at $7,658.5/mt in choppy trading on Thursday, with open interest decreasing 5,250 lots to 309,000 lots. It is expected to trade between $7,640-7,720/mt today.

The most-active SHFE 2101 copper contract inched up 0.05% to settle at 56,950 yuan/mt in overnight trading, and is likely to move between 56,800-57,300 yuan/mt today, while spot premiums will be seen at 100-160 yuan/mt.

The latest US initial claims for unemployment benefits hit a pandemic-era low, the Labour Department reported Thursday. The final Markit Services Purchasing Managers’ Index (PMI) came in at 58.4 in November, recording a fresh high since March 2015, while non-manufacturing PMI fell to its lowest in six months as the Covid-19 pandemic still had impact on new orders and business activities. The US stock market was hit by news that Pfizer expects to reduce half of the coronavirus vaccines it originally planned for this year due to supply-chain issues. Besides, tensions between the US and China escalated, with the US claiming to continue to impose restrictions over China, which dampened risk appetite. The US dollar index plunged to a fresh low in more than 2-1/2 years overnight, which limited downside space for copper futures.

Zinc: Three-month LME zinc added 0.31% to end at $2,758/mt on Thursday, with open interest increasing 2,380 lots to 245,000 lots. Zinc stocks across LME-listed warehouses shrank 325 mt or 0.15% to 219,950 mt. A weakening US dollar and increased hopes of US Republicans and Democrats breaking a stalemate over a new fiscal stimulus package supported zinc prices. LME zinc is expected to trade between $2,730-2,780/mt today.

The most-liquid SHFE 2101 zinc contract closed 0.33% lower at 20,860 yuan/mt in overnight trading, with open interest falling 1,695 lots to 87,364 lots. The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 57.8, the second highest reading since May 2010, from October’s 56.8. But US-China trade tensions weighed on zinc prices. The January contract is likely to move between 20,700-21,200 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen stable at 130-140 yuan/mt against the contract.

Nickel: The most-active SHFE 2102 nickel contract slumped to a nearly two-week low of 116,410 yuan/mt in overnight trading before recouping some losses to settle 0.64% lower at 117,430 yuan/mt, generating a V-shaped movement.

Lead: Three-month LME lead closed 0.93% weaker at $2,033/mt on Thursday, posting a two-day losing streak.

The most-traded SHFE 2101 lead contract edged down 0.2% to settle at 14,885 yuan/mt in overnight trading.

Tin: Three-month LME tin rose 0.64% to end at $18,925/mt on Thursday. Continued weakness of the US dollar index underpinned tin prices. LME tin is likely to trade between $18,500-19,000/mt today.

The most-liquid SHFE 2102 tin contract advanced 0.25% to close at 146,330 yuan/mt in overnight trading, and support below will be seen from around 145,000 yuan/mt today.  

Copper
Aluminium
Lead
Tin
Copper
Nickel

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