SMM Morning Comments (Dec 7): Nonferrous metals on both SHFE and LME advanced mostly on hopes for US fiscal stimulus bill and positive vaccine progress

SHANGHAI, Dec 7 (SMM) — Shanghai base metals and their counterparts on the LME cruised higher for the most part on Monday morning as soft US jobs data raised hopes for US coronavirus relief bill and a slew of positive vaccine news boosted market sentiment.  

Shanghai base metals rose for the most part on last Friday night. Copper added 0.49%, aluminium rose 1.45%, nickel jumped 2.19% and tin advanced 0.47%, while zinc weakened 0.29% and lead declined 1.24%.

The LME complex performed similarly. Copper gained 1.3%, aluminium climbed 1.29%, nickel surged 2.28% and tin inched up 0.37%, while zinc slid 0.62% and lead edged down 0.02%.

Copper: Three-month LME copper settled higher by 1.3% at $7,758/mt on last Friday, after earlier hitting its new high in 2020 at $7,774/mt, with open interest rising 2,170 lots to 311,000 lots. It is expected to trade between $7,710-7,790/mt today.  

The most-active SHFE 2101 copper contract added 0.49% to close at 57,460 yuan/mt on last Friday night, and is likely to move between 57,300-57,800 yuan/mt today while spot premiums will be seen lower at 80-140 yuan/mt.

Data from US Labour Department showed that U.S. non-farm payrolls increased by 245,000 jobs last month after rising by 610,000 in October. That was the smallest gain since the jobs recovery started in May. Weak jobs data raised hopes for more fiscal stimulus packages from the US federal government, and this, together with upbeat coronavirus vaccine news, boosted market sentiment and kept the US dollar index on its downward trend.

Aluminium: Three-month LME aluminium ended 1.29% higher at $2,041/mt on last Friday, and is expected to trade between $2,010-2,060/mt today.

The most-traded SHFE 2101 aluminium contract settled 1.45% higher at 16,415 yuan/mt on last Friday night. The contract is likely to trade between 16,250-16,500 yuan/mt today, while spot premiums will be seen at 80-100 yuan/mt.

Nickel: The most-active SHFE 2102 nickel contract rose 2.19% to end at 120,140 yuan/mt on last Friday night, with open interest increasing 7,302 lots to 151,000 lots. Weak #300 stainless steel prices had weighed on nickel-related products prices, but market sentiment improved after both stainless steel mills and NPI plants planned to cut output. In addition, refined nickel inventories in China shrank to its lowest level in 2020 amid stable consumption and fewer imports.

Zinc: Three-month LME zinc weakened 0.62% to close at $2,741/mt on last Friday, with open interest decreasing 1,549 lots to 243,000 lots. Zinc stocks across LME-listed warehouses shrank 625 mt to 219,325 mt. It is expected to trade between $2,730-2,780/mt today.  

The most-traded SHFE 2101 zinc contract slid 0.29% to end at 20,900 yuan/mt on last Friday night after hitting a one-week low at 20,760 yuan/mt earlier in the session. It is likely to move between 20,700-21,200 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen at 140-150 yuan/mt against the contract.

Tin: Three-month LME tin advanced 0.37% to settle at $18,995/mt on last Friday, with open interest rising 283 lots to 18,361 lots. The dollar fell to a two-and-a-half-year low on Friday, on track for its worst week in a month, as investors shrugged off a weaker-than-expected November U.S. non-farm payrolls report and focused on a flurry of positive vaccine news. LME tin is expected to continue to test the 19,000 mark today.

The most-liquid SHFE 2101 tin contract settled 0.47% higher at 147,600 yuan/mt on last Friday night, with open interest decreasing 491 lots to 27,463 lots. Support below will be seen from 145,000 yuan/mt today.