SMM Morning Comments (Nov 20): Shanghai base metals were mostly higher and the LME complex also rose for the most part

SHANGHAI, Nov 20 (SMM) — Nonferrous metals on the SHFE were mostly higher on Friday morning, and their counterparts on the LME also rose for the most part.

Shanghai base metals mostly advanced in overnight trading. Copper added 0.53%, aluminium rose 0.03%, lead climbed 2.02%, zinc went up 1.86% and nickel strengthened 0.58%, while tin fell 0.88%.

The LME complex also rose for the most part. Lead climbed 0.82% to lead the gains, copper advanced 0.3%, nickel added 0.6% and zinc edged up 0.47%, while aluminium and tin underperformed with 0.05% and 0.58% losses respectively.

Copper: Three-month LME copper rose 0.3% to end at $7,090/mt on Thursday, and is likely to trade between $7,040-7,120/mt today.

The most-active SHFE 2101 copper contract went up 0.66% to close at 53,080 yuan/mt in overnight trading, and it is expected to move between 52,800-53,300 yuan/mt today, while spot premiums will be seen at 150-210 yuan/mt.

According to the data released by the US Department of Labor at night, the number of initial jobless claims in the US rebounded to 742,000 as of November 14. Due to the continuous deterioration of the pandemic situation, the number of initial jobless claims rebounded again, the recovery rate of the job market showed signs of slowing down, and the cautious sentiment of investors continued to increase, which limited the upside of copper futures to a certain extent. According to another source, the Republican leaders in the US Senate have agreed to resume negotiations with the Democratic Party on a new round of potential anti-pandemic stimulus bill. The US dollar index fell sharply at the end of the US session, and copper futures were boosted and turned to rise. On the spot side, premium is likely to keep high in the near term.

Aluminium: Three-month LME aluminium fell 0.05% to close at $1,989/mt on Thursday, with open interest falling to 724,000 lots. It is expected to trade between $1,970-2,010/mt today. 

The most-liquid SHFE 2012 aluminium contract climbed 0.57% to settle at 15,810 yuan/mt on Thursday night, and is likely to trade between 15,600-16,000 yuan/mt today. Social inventories still declined slightly on Thursday from last week, and the spot under low inventories maintained a premium.

Zinc: Three-month LME zinc rose 0.47% to close at $2,753/mt on Thursday. Zinc stocks at LME-listed warehouses fell 25 mt to 220,275 mt. Overnight, the weakness of the US dollar provided support for zinc prices, and the good news of macro vaccines still surrounded the market. The total number of housing starts in the US was higher than expectations with the financial stimulus expectations of the European Central Bank. The South Africa's mining accident continued, boosting market sentiment. However, the pandemic continued to ferment and the number of initial jobless claims in the US last week was higher than expectations, which is expected to suppress the upside of zinc prices. It is likely to trade between $2,720-2,770/mt today.

The most-liquid SHFE 2101 zinc contract rose 1.84% to end at 21,020 yuan/mt in overnight trading. Domestic TC continues to decline. On the fundamentals, the supply shortage at the low TC ore end remains, and some smelters have production reduction plans. The tight supply end logically supports zinc prices. The December zinc contract is expected to move between 20,300-20,800 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 120-140 yuan/mt.

Nickel: The most-active SHFE 2102 nickel contract rose 0.58% to close at 116,990 yuan/mt on Thursday. Open interests rose 2,394 lots to 151,000 lots. Whether the contract could remain above 117,000 yuan/mt will be monitored today.

Lead: Three-month LME lead settled 0.82% higher at $1,972/mt on Thursday. The optimistic trend of general increase of LME metals continued. LME Lead rose for eight consecutive days, the US dollar index went down, and the trend of general increase of base metals continued.

The most-active SHFE 2101 lead contract trended higher on Thursday night, ending 2.23% higher at 14,905 yuan/mt. Pressure of cautious purchasing sentiment on lead price in the downstream of domestic spot market will come under scrutiny.

Tin: Three-month LME tin closed down 0.58% at $18,750/mt on Thursday. According to foreign media reports, US Senate Democratic leader Schumer said on Thursday that Republican majority leader McConnell had agreed to resume negotiations on the COVID-19 rescue plan despite the surge in new COVID-19 cases. LME tin is expected to keep fluctuating in the near term, and the guidance of the US dollar will be monitored. Pressure above will be seen from $190,000 /mt today. Support below will be seen from $185,000/mt today.

The most-liquid SHFE 2101 tin contract closed up 0.23% at 147,340 yuan/mt on Thursday night. The contract is expected to start to fluctuate today. Pressure above will be seen from 148,500 yuan/mt today. Support below will be seen from 145,500 yuan/mt today.