SMM Morning Comments (Dec 14): Nonferrous metals on the LME advanced across the board, the SHFE complex mixed

SHANGHAI, Dec 14 (SMM) — LME base metals rose across the board on Monday morning, while their counterparts on the SHFE set for a mixed start.  

Shanghai base metals fell for the most part on last Friday night. Copper shed 0.62%, aluminium declined 1.43%, zinc fell 1.84% and lead weakened 1.43%, while nickel added 0.4% and tin gained 0.5%.

The LME complex also declined mostly on last Friday. Copper declined 1.33%, aluminium pulled back 0.73%, zinc fell 2.76%, lead weakened 1.15% and nickel slipped 0.37%, while tin increased 0.39%.

Copper: Three-month LME copper Fell 1.33% to close at $7,768.5/mt on last Friday. The most-active SHFE 2101 copper contract slid 0.62% to end at 57,790 yuan/mt on last Friday night.

The US dollar index, which measures the greenback against a basket of leading currencies, rebounded from lows on last Friday as concerns over delayed U.S. economic stimulus package amid a surge in COVID-19 cases and the increasing possibility that Britain will exit the European Union without a deal weighed on risk appetite. LME copper is expected to trade between $7,720-7,800/mt today, and SHFE copper between 57,400-57,900 yuan/mt while spot premiums will be seen lower at 50-90 yuan/mt.

Zinc: Three-month LME zinc touched a new high in 2020 at $2,890/mt on last Friday before giving up all the gains to end 2.76% lower at $2,784.5/mt, with open interest rising 2,132 lots to 236,000 lots. Zinc stocks across LME-listed warehouses fell by 1,100 mt or 0.51% to 214,875 mt. The stalled talks on US fiscal stimulus in Washington stoked worries about future economic recovery, but the rollout of Covid-19 vaccines is expected to underpin zinc prices. LME zinc is expected to fluctuate between $2,830-2,880/mt today.

The most-liquid SHFE 2101 zinc contract weakened 1.84% to settle at 21,315 yuan/mt on last Friday night. An SMM survey showed that zinc social inventories in China continued to shrink last week. Consumption of galvanised structural parts weakened due to environmental restrictions in north China, but orders for galvanised plate from producers of home appliances and automobiles were strong. 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 higher at 90-110 yuan/mt against the contract.

Nickel: The most-traded SHFE 2102 nickel contract rose 0.4% to close at 129,340 yuan/mt on last Friday night, with open interest increasing 3,659 lots to 175,000 lots.

Lead: Three-month LME lead declined 1.15% to end at $2,057/mt on last Friday, posting a three-day losing streak.

The most-active SHFE 2101 lead contract closed 1.43% weaker at 14,785 yuan/mt on last Friday night.

Tin: Three-month LME tin ended 0.39% firmer at $19,530/mt on last Friday. The US dollar index rose slightly last Friday, but as global economic growth accelerated, and the US Federal Reserve is expected to keep interest rates near zero in the next few years, many analysts expect the dollar to weaken further in long run. LME tin is expected to fluctuate between $19,000-20,000/mt today.

The most-liquid SHFE 2102 tin contract settled 0.5% higher at 151,720 yuan/mt on last Friday night, with open interest decreasing 288 lots to 32,246 lots. The February tin contract is likely to move between 148,600-153,000 yuan/mt today.