SMM Morning Comments (Dec 8): Shanghai base metals mostly advanced on a possible new COVID-19 U.S. stimulus bill and upbeat vaccine news

SHANGHAI, Dec 8 (SMM) — Shanghai base metals were mostly higher on Tuesday morning, while their counterparts on the LME set for a mixed start, as investors expect a fresh US coronavirus relief package and vaccines to fight the virus.

Shanghai base metals, except for copper and aluminium, closed higher in overnight trading. Zinc added 1.94, lead advanced 1.83%, and nickel and tin both gained 1%, while copper shed 0.31% and aluminium weakened 0.46%.

The LME complex ended mixed on Monday. Copper slid 0.5%, aluminium fell 1.37% and nickel edged down 0.06%, while zinc rose 2.15%, lead jumped 2.78% and tin added 0.63%.

Copper: Three-month LME copper weakened 0.5% to settle at $7,719.5/mt on Monday, with open interest rising 1,112 lots to 312,000 lots. It is expected to trade between $7,680-7,760/mt today.

The most-traded SHFE 2101 copper contract slid 0.31% to close at 57,160 yuan/mt in overnight trading, and is likely to move between 56,800-57,300 yuan/mt today while spot premiums will be seen lower at 80-110 yuan/mt.

On the coronavirus front, more than 14.8 million COVID-19 cases have been confirmed in the United States along with 280,000 deaths, and the country’s daily new infections stood more than 230,000 for ten consecutive days. The resurgence of coronavirus in the US stoked concerns about stricter social distancing orders by state governments. Besides, uncertainties over talks on a fresh fiscal stimulus deal and heightened tensions between US and China weighed on copper futures.

Zinc: Three-month LME zinc jumped 2.15% to close at $2,800/mt on Monday, with open interest decreasing 1,324 lots to 242,000 lots. Zinc stocks across LME-listed warehouses shrank 500 mt or 0.23% to 218,825 lots. Expectations of coronavirus relief package from the US and better-than-expected investor confidence index in Eurozone for December boosted market sentiment. Vedanta Resources’s zinc mine in South Africa remained suspended. Relatively tight zinc concentrate supply was supportive to zinc prices. LME zinc is expected to trade between $2,760-2,810/mt today.  

The most-traded SHFE 2101 zinc contract rose 1.94% to end at 21,290 yuan/mt in overnight trading, with open interest increasing 4,943 lots to 91,641 lots. Treatment charges for domestic zinc concentrate continued to fall, suggesting still tight zinc concentrate supply, and declines in zinc social inventories indicated strong consumption. The January zinc contract is likely to fluctuate between 20,900-21,400 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen at 130-140 yuan/mt.  

Nickel: The most-liquid SHFE 2102 nickel contract climbed 1% to settle at 120,710 yuan/mt in overnight trading, with open interest rising 2,316 lots to 150,000 lots.

Lead: Three-month LME lead surged 2.78% to end at $2,089/mt on Monday on weak US dollar index and positive developments in coronavirus vaccines.

The most-active SHFE 2101 lead contract closed 1.83% higher at 15,030 yuan/mt in overnight trading.

Tin: Three-month LME tin strengthened 0.63% to end at $19,115/mt on Monday, with open interest rising 64 lots to 18,425 lots. The US dollar index extended declines on improved hopes for a new US fiscal stimulus deal, and relatively tight supply in overseas markets underpinned tin prices. LME tin is expected to move between $19,000-20,000/mt today.

The most-liquid SHFE 2101 tin contract advanced 1% to close at 149,500 yuan/mt in overnight trading, with open interest increasing 1,191 lots to 29,756 lots. The contract is expected to test pressure from the 150,000 mark today.