SMM Morning Comments (Dec 25): Shanghai base metals all cruised higher on Friday morning on Brexit trade deal

SHANGHAI, Dec 25 (SMM) — Nonferrous metals on the SHFE advanced across the board on Friday morning, holding onto overnight gains, as risk appetite improved after Britain clinched a trade deal with the European Union on Thursday. The London Metals Exchange will be closed today for the Christmas holiday.

Shanghai base metals all closed higher in overnight trading. Copper inched up 0.05%, aluminium advanced 0.85%, zinc firmed 0.35%, lead gained 0.21%, nickel strengthened 0.9% and tin rose 1.16%. 

The LME complex, except for copper, also cruised higher. Aluminium increaed 1.3%, zinc added 0.42%, lead firmed 0.66%, nickel climbed 0.71% and tin edged up 0.02%. 

Copper: Three-month LME copper ended 0.21% lower at $7,830.5/mt in choppy trading on Thursday, while the most-traded SHFE 2102 copper contract inched up 0.05% to close at 58,210 yuan/mt in overnight trading.

House Republicans blocked a Democratic attempt to increase the size of stimulus to $2,000 per person, and this, together with still rising Covid-19 cases, kept investors cautious. 

However, the US dollar was mostly lower on Thursday, while sterling gained after Britain and the European Union struck a post-Brexit trade deal, boosting the market’s appetite for risk. LME copper stocks have declined for several consecutive days, which also lent support to copper futures. SHFE copper is expected to move between between 57,900-58,400 yuan/mt today, while spot copper will be traded between discounts of 30 yuan/mt and premiums of 100 yuan/mt.

Zinc: Three-month LME zinc rose steeply from around the daily moving average to an intraday high of $2,870/mt in European trading hours before paring some gains to end 0.42% firmer at $2,836/mt on Thursday. Zinc stocks across LME-listed warehouses dropped by 325 mt or 0.16% to 205,900 mt. A sliding US dollar, the post-Brexit trade deal agreed by Britain and the European Union and optimism over US fiscal stimulus package boosted market sentiment.

The most-liquid SHFE 2102 zinc contract closed 0.35% higher at 21,530 yuan/mtin overnight trading, with open interest rising 225 lots to 94,176 lots. Zinc social inventories are likely to decline further as downstream users restocked actively. The February contract is likely to move between 21,300-21,800 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen slightly lower at 130-150 yuan/mt against the January contract.

Nickel: The most-active SHFE 2103 nickel contract added 0.9% to close at 126,320 yuan/mt in overnight trading, with open interest rising 2,963 lots to 138,000 lots. Pressure above from the five-day moving average will be monitored today.

Lead: Three-month LME lead advanced 0.66% to settle at $1,990/mt on Thursday. Investors seemed to have shrugged off President Donald Trump’s criticism of the fiscal relief package earlier approved in Congress, which could put the bill in limbo.

The most-liquid SHFE 2102 lead contract advanced 0.21% to end at 14,595 yuan/mt in overnight trading. SHFE lead is likely to rise further with support from secondary lead production costs, but recent tepid consumption may limit the upward space.

Tin: Three-month LME tin edged up 0.02% to close at $20,045/mt on Thursday, with open interest losing 155 lots to 17,057 lots. Britain clinched a trade deal with the European Union on Thursday, just seven days before it exits one of the world’s biggest trading blocs in its most significant global shift since the loss of empire.Britain clinched a trade deal with the European Union on Thursday, just seven days before it exits one of the world’s biggest trading blocs in its most significant global shift since the loss of empire. Tight tin supply overseas is likely to continue to support LME tin. It is expected to trade between $19,800-20,300/mt today.

The most-liquid SHFE 2102 tin contract increased 1.16% to end at 152,950 yuan/mt in overnight trading, with open interest decreasing 442 lots to 21,336 lots. SHFE tin is likely to fluctuate between 150,000-156,000 yuan/mt today.