SMM Morning Comments (Dec 30): Shanghai base metals performance mixed as Wall Street declines from record highs

Published: Dec 30, 2020 10:00

Save

Shanghai base metals traded mixed on Wednesday morning, after major indexes on Wall Street snapped their multi-day winning streaks overnight. Meanwhile, their counterparts on the LME were mostly lower.

SHANGHAI, Dec 30 (SMM) — Shanghai base metals traded mixed on Wednesday morning, after major indexes on Wall Street snapped their multi-day winning streaks overnight. Meanwhile, their counterparts on the LME were mostly lower.

Shanghai base metals closed mixed in overnight trading. Copper slid 0.48%, zinc fell 1.94% and nickel weakened 2.06%, while aluminium climbed 0.48%, lead remained unchanged, and tin increased 0.66%.

The LME complex ended mostly lower on Tuesday. Copper edged down 0.12%, zinc weakened 2.72%, nickel shed 0.53%, lead fell 0.9% and aluminium lost 2.39%, while tin added 0.52%.

Copper: Three-month LME copper fell 0.12% to end at $7,821/mt on Tuesday, and is likely to trade between $7,800-7,880/mt today.

The most-active SHFE 2102 copper contract went down 0.48% to close at 58,300 yuan/mt in overnight trading, and it is expected to move between 58,200-58,700 yuan/mt today, while spot premiums will be seen at 150-170 yuan/mt.

Optimism has faded. The Republican Party in the US Senate blocked legislation to raise the individual bail-out subsidy from 600 to 2,000 dollars. Investors' hopes for the US government to issue a higher amount of bail-out cheques were dashed. The uncertainty of COVID-19 continues to increase, the first case of variant strain infection was found in the US, the progress of vaccine promotion was slow, and the hospitalization rate in COVID-19 reached a record high. However, the US dollar index fell below 90 again last night, which still supported the high copper prices. On the spot side, the willingness to restock was low before the New Year's Eve, and the risk aversion was the highest. Only a small number of downstream enterprises in the market made appropriate restocking at low prices when the SHFE copper was adjusted back. At the end of the year, the supply and demand sides are likely to show a seesaw situation, and there is limited room for further price reduction.

Zinc: Three-month LME zinc fell 2.72% to close at $2,759/mt on Tuesday. Zinc stocks at LME-listed warehouses fell 150 mt to 205,750 mt. Overnight, Many major countries showed signs of aggravation of the pandemic, and the market failed to hope that the US government would issue a higher amount of bail-out cheques, which destroyed the expectation of the recent economic recovery, hit the stock market, and led to the downward pressure on LME Zinc. The contract is likely to trade between $2,780-2,830/mt today.

The most-liquid SHFE 2102 zinc contract fell 1.94% to end at 20,930 yuan/mt in overnight trading. Under the drastic cooling in China, high prices of raw materials steel and declining outdoor construction in North China led to weak orders of galvanizing plants. However, the continuous downward adjustment of domestic TCs still supported zinc prices. Macro guidelines will be monitored in the near term. The SHFE zinc contract is expected to move between 20,800-21,300 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 90-110 yuan/mt.

Nickel: The most-active SHFE 2102 nickel contract fell 2.06% to close at 125,530 yuan/mt on Tuesday. Open interests rose 1,514 lots to 154,000 lots. The support from 125,000 yuan/mt will be monitored today.

Lead: Three-month LME lead settled 0.9% lower at $1,972/mt on Tuesday.

The most-active SHFE 2102 lead contract remained unchanged at 14,810 yuan/mt on Tuesday night. Operating rates of downstream batteries remained stable, and traders restocked at low prices at the end of the year. The accumulation of stocks in the domestic lead market is suspended. In the long run, the fundamentals of lead are still relatively abundant, and the space above is limited. The contract is likely to continue to fluctuate at high.

Tin: Three-month LME tin closed up 0.52% at $20,150/mt on Tuesday. Under the macro and fundamental support, the contract will remain trading robustly. Pressure above will be seen from $20,500 /mt today. Support below will be seen from $19,900/mt today.

The most-liquid SHFE 2103 tin contract rose 0.6% at 154,300 yuan/mt on Tuesday night. The contract is expected to fluctuate robustly in the near term. Pressure above will be seen from 156,000 yuan/mt today. Support below will be seen from 150,000 yuan/mt today.

Market commentary Copper Aluminium Zinc Nickel Lead Tin

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.

For any inquiries or for more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

59 mins ago

Yingkou Jianfa Shenghai Phase I 300,000 mt Copper Cathode Project Smelting Furnace Starts Production, Pyrometallurgy System Enters Furnace Drying Stage

At 9:58 on September 12, the core smelting furnace of the pyrometallurgy system at Yingkou Jianfa Shenghai Nonferrous Metals & Chemicals Co., Ltd.'s multi-metal recovery project was successfully ignited, officially entering the furnace drying stage and marking a key step toward full-line commissioning and production. Public information shows that the Yingkou Jianfa Shenghai polymetallic complex gold-silver ore comprehensive recovery technology upgrade, relocation, and expansion project uses copper concentrates as its main raw material, with an overall planned capacity of 600,000 mt/year of copper cathode to be built in two phases, with capacity of 300,000 mt/year in each phase. Phase I is designed to produce 300,000 mt/year of copper cathode and 1.18 million mt/year of sulphuric acid, along with supporting systems for smelting, converting, anode refining, electrolysis, slag beneficiation, and precious metal recovery. After this ignition, the project will carry out standardized furnace drying and hot-state integrated trial runs across the entire system to verify equipment, instruments, interlocks, and automatic control systems. The project has not yet formally started raw material feeding and production; after furnace drying and system commissioning are completed, it will further advance the commissioning of Phase I's 300,000 mt/year copper cathode capacity. If the project is successfully brought into production, it is expected to increase copper smelting capacity in North China and further boost domestic demand for copper concentrate raw materials.

59 mins ago

16 hours ago

Alchemy Resources Starts Drilling Copper-Gold Targets at Yellow Mountain

Alchemy Resources announced on September 11 that reverse-circulation drilling has commenced across its Yellow Mountain and Overflow projects in New South Wales, Australia, with up to 15 holes planned during the latest exploration campaign. At the 80%-owned Yellow Mountain project, drilling will test extensions to previously identified copper-gold and polymetallic mineralisation, as well as two previously undrilled geophysical targets. Previous drilling at Yellow Mountain returned an intersection of 113 metres grading 1.17% copper equivalent, comprising 0.33% copper, 0.37 g/t gold, 24.3 g/t silver, 0.86% lead and 1.23% zinc. The latest drilling campaign is designed to test whether the known mineralised system extends into newly identified target areas. The program will also include drilling at the Overflow project, where Alchemy is targeting extensions to existing mineralisation along strike and at depth. Overflow currently hosts an inferred mineral resource of approximately 342,000 ounces of gold equivalent and contains gold, silver, copper, lead and zinc mineralisation. The commencement of drilling provides a near-term test of the scale and continuity of mineralisation at Yellow Mountain. The previously reported broad copper-gold-polymetallic intersection indicates potential for a sizeable mineralised system, while the newly defined geophysical targets provide additional exploration upside. Drilling results will be important in determining whether the mineralised footprint can be materially expanded.

16 hours ago

Freeport CEO Signals Likely Go-Ahead for $4.5 Billion Bagdad Copper Expansion

Freeport-McMoRan Chief Executive Officer Kathleen Quirk has indicated that the company expects to move forward with the proposed expansion of its Bagdad copper mine in Arizona, marking a stronger commitment to the project ahead of a formal investment decision. Speaking at the Jefferies Global Industrials Conference on September 10, Quirk said the project still requires input from Freeport's board but that she expects the company will proceed. She described the expansion as a roughly three-year construction project and noted that no major permitting hurdles are expected. Freeport's latest project estimates put capital expenditure for the Bagdad expansion at approximately US$4.5 billion, around 30% above the previous US$3.5 billion estimate, reflecting cost escalation, scope changes and additional engineering. The project would more than double concentrator capacity at Bagdad and is expected to add approximately 200–250 million lb, or around 91,000–113,000 tonnes, of copper production annually, alongside an additional 10–12 million lb of molybdenum. Bagdad currently has a reserve life exceeding 80 years. Freeport's Q2 2026 regulatory filing had described the project as being prepared for a potential investment decision during the second half of 2026. The latest comments therefore represent a more positive signal from management on the likelihood of development, although formal board approval has not yet been announced. A decision to proceed with Bagdad would represent one of Freeport's most significant near-term copper growth investments in the US. The potential addition of more than 90,000 tonnes per year of copper would materially increase Freeport's US output, although first production would remain several years away given the expected construction period. Attention will now turn to formal board approval and a final investment decision.

16 hours ago