SMM Morning Comments (Dec 15): LME nonferrous metals fell across the board amid increasing concerns of new lockdown measures

Published: Dec 15, 2020 10:00
Shanghai base metals set for a mixed start on Tuesday morning, while their counterparts on the LME fell across the board as investors worried that the continuous spread of Covid-19 may prompt national countries to impose stricter lockdown measures.

SHANGHAI, Dec 15 (SMM) — Shanghai base metals set for a mixed start on Tuesday morning, while their counterparts on the LME fell across the board as investors worried that the continuous spread of Covid-19 may prompt national countries to impose stricter lockdown measures. 

Shanghai base metals closed mixed in overnight trading. Copper shed 0.35%, zinc weakened 0.14% and lead slid 0.5%, while aluminium added 0.18%, nickel rose 0.63% and tin increased 1.74%.

The LME complex, except for lead, ended higher on Monday. Copper added 0.12%, aluminium advanced 0.76%, zinc firmed 1.87%, nickel gained 1.76% and tin rose 0.49%, while lead underperformed with a 1.31% loss. 

Copper: Three-month LME copper added 0.12% to close at $7,778/mt on Monday, whereas the most-traded SHFE 2101 copper contract shed 0.35% to end at 57,500 yuan/mt in overnight trading.

The Electoral College voted Monday to cement President-elect Joe Biden’s victory over President Donald Trump in this year’s presidential election. The first round of shots from the vaccine developed by Pfizer and BioNTech were given in the U.S. on Monday, but the country also passed 300,000 deaths from Covid-19, according to data from Johns Hopkins University. New York City Mayor Bill de Blasio also warned residents that a full shutdown may be needed to protect the city’s hospitals. Besides, the US dollar index rebounded from lows overnight, which limited upward space for copper futures.

LME copper is expected to trade between $7,730-7,810/mt today, and SHFE copper between 57,400-57,900 yuan/mt while spot copper is likely to be traded between discounts of 10 yuan/mt and premiums of 70 yuan/mt.

Zinc: Three-month LME zinc settled 1.87% higher at $2,836.5/mt on Monday, with open interest rising 4,679 lots to 241,000 lots. Zinc stocks across LME-listed warehouses plunged by 1,300 mt or 0.61% to 213,575 mt. The rollout of Pfizer vaccine and Biden’s winning of presidential election lifted market sentiment, while the continuous spread of Covid-19 exerted negative impact on global economic recovery, which put some pressure on zinc prices. LME zinc is expected to fluctuate between $2,790-2,840/mt today.

The most-liquid SHFE 2101 zinc contract pulled back 0.14% to close at 21,425 yuan/mt in overnight trading, with open interest decreasing 2,052 lots to 77,989 lots. Currently, treatment charges for both domestic and seaborne zinc concentrate remained at low levels, lowering profits at zinc smelters and driving them to reduce production. Relative tight zinc supply was still supportive to zinc prices. The January contract is likely to move between 21,000-21,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen stable at 90-110 yuan/mt against the contract.

Nickel: The most-active SHFE 2102 nickel contract advanced 0.63% to end at 131,050 yuan/mt in overnight trading, with open interest increasing 4,307 lots to 179,000 lots.

Lead: Three-month LME lead shed 1.31% to settle at $2,030/mt on Monday, posting a four-day losing streak. Lead stocks across LME-listed warehouses surged by about 10,000 mt.

The most-liquid SHFE 2101 lead contract weakened 0.5% to end at 14,790 yuan/mt in overnight trading. Zinc inventories in China have increased for nine straight weeks, which pressured SHFE lead.

Tin: Three-month LME tin ended 0.49% firmer at $19,625/mt on Monday, after recording a new high in 2020 at $19,765/mt earlier in the session. On Monday, the US dollar index at one point fell to 90.419, its lowest since April 2018. European countries imposed stricter restrictions and the New York City may enter a full lockdown to curb the spread of Covid-19, which boosted risk-off sentiment. LME tin is expected to fluctuate between $19,200-20,000/mt today.

The most-liquid SHFE 2102 tin contract rose 1.74% to settle at 153,540 yuan/mt in overnight trading, with open interest rising 1,931 lots to 33,558 lots. The February tin contract is likely to move between 149,400-155,000 yuan/mt today.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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