SMM Morning Comments (Dec 21): Base metals on both SHFE and LME fell mostly on dollar bounce-back

Published: Dec 21, 2020 10:05

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Shanghai base metals and their counterparts on the LME cruised lower for the most part on Monday morning as the US dollar rebounded slightly.

SHANGHAI, Dec 21 (SMM) — Shanghai base metals and their counterparts on the LME cruised lower for the most part on Monday morning as the US dollar rebounded slightly.

Shanghai base metals closed mixed on last Friday night. Copper added 0.34%, zinc advanced 0.21% and lead gained 0.54%, while aluminium shed 0.96%, nickel weakened 0.28% and tin slid 0.32%.

The LME complex also ended mixed on last Friday. Copper firmed 0.71%, zinc advanced 0.32% and tin rose 0.75%, while aluminium fell 0.56%, lead declined 0.34% and nickel edged down 0.09%.

Copper: Three-month LME copper surged to its highest since 2013 at $8,028/mt on last Friday, before paring some gains to end 0.71% higher at $7,995.5/mt. The most-traded SHFE 2102 copper contract recorded a new high since 2012 at 59,640 yuan/mt on last Friday, before giving up some gains to close 0.34% higher at 59,320 yuan/mt, with open interest rising 3,563 lots to 121,000 lots.

Optimism over US $900 billion Covid relief bill boosted market sentiment. However, the United Kingdom has identified a new, more infectious strain of the virus, leading to lockdowns in London and causing E.U. nations to ban flights with Britain, which capped gains of copper futures. The House and the Senate still have to pass the deal, which is tied to broader government funding legislation. They face a deadline of 12:01 a.m. ET to pass funding or the government will shut down. LME copper is expected to trade between $7,920-8,000/mt today, and SHFE copper between 59,000-59,500 yuan/mt, While spot copper will be traded between discounts of 200 yuan/mt and 120 yuan/mt.

Nickel: The most-liquid SHFE 2102 nickel contract shed 0.28% to settle at 130,120 yuan/mt on last Friday night, with open interest decreasing 4,539 lots to 144,000 lots.。

Zinc: Three-month LME zinc added 0.32% to close at $2,858/mt last Friday, with open interest increasing 1,501 lots to 232,000 lots. Zinc stocks across LME-listed warehouses plunged by 1,200 mt or 0.57% to 209,950 mt. LME zinc is expected to fluctuate between $2,830-2,880/mt today.

The most-traded SHFE 2102 zinc contract settled 0.21% higher at 21,915 yuan/mt on last Friday night, with open interest rising 6,102 lots to 84,556 lots. Zinc concentrate remained in tight supply. The electricity consumption restrictions in east China and rising natural gas prices in the north weighed on end-user consumption. The February contract is likely to move between 21,500-22,000 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen lower at 80-100 yuan/mt against the January contract.

Lead: Three-month LME lead ended 0.34% lower at $2,030/mt on last Friday. Lead stocks across LME-listed warehouses continued to build up. Concerns over US fiscal stimulus bill and Brexit trade talks weighed on confidenct of investors.

The most-liquid SHFE 2101 lead contract settled 0.54% higher at 14,905 yuan/mt on last Friday night. With rising inventories and sluggish consumption, fundamentals of SHFE lead remained weak, but upbeat macroeconomic environment underpinned lead prices.

Tin: Three-month LME tin ended 0.75% higher at $20,080/mt on last Friday. The US dollar index rebounded slightly last Friday, but still hovered around the two-and-a-half-year low. Tight supply and a weak US dollar underpinned tin prices. LME tin is likely to fluctuate between $19,600-21,000/mt today.

The most-traded SHFE 2102 tin contract weakened 0.32% to settle at 154,150 yuan/mt on last Friday night, with open interest decreasing 650 lots to 32,728 lots. It is expected to move between 152,000-157,000 yuan/mt today.

Copper Aluminium Lead Tin Nickel Zinc

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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