SMM Morning Comments (Dec 9): Shanghai base metals and the LME complex mostly advanced

SHANGHAI, Dec 9 (SMM) — Nonferrous metals on the SHFE were mostly higher on Wednesday morning, while their counterparts on the LME also advanced for the most part.

Shanghai base metals closed mixed in overnight trading. Copper shed 0.21%, aluminium fell 1.33% and nickel closed flat, while zinc added 0.35%, lead advanced 0.67% and tin climbed 0.23%.

The LME complex cruised higher for the most part on Tuesday. Zinc added 0.32%, lead advanced 0.29%, nickel climbed 0.21% and tin rose 0.42%, while copper weakened 0.12% and aluminium shed 0.7%.

Copper: Three-month LME copper slid 0.12% to close at $7,710.5/mt on Tuesday, and is expected to trade between $7,680-7,760/mt today.

The most-active SHFE 2101 copper contract weakened 0.21% to settle at 56,910 yuan/mt in overnight trading, and is likely to move between 56,800-57,300 yuan/mt today while spot premiums will be seen lower at 60-100 yuan/mt.

US total coronavirus cases broke above 15 million, and investors are expecting more economic stimulus package from the US and positive developments in Covid-19 vaccines. Data from the American Petroleum Institute (API) showed that US crude inventories rose unexpectedly by 1.14 million barrels to 493 million barrels, and the US dollar index, which tracks the value of the greenback, rebounded from a low of 90.75, which weighed on copper futures.

Zinc: Three-month LME zinc ended 0.32% higher at $2,809/mt on Tuesday, with open interest decreasing 2,259 lots to 240,000 lots. Zinc stocks across LME-listed warehouses shrank 475 mt or 0.22% to 218,350 mt. Expectations of more fiscal stimulus package from the US and positive Covid vaccine news lifted risk appetite, but surging coronavirus cases globally may weigh on demand. LME zinc is expected to fluctuate between $2,780-2,830/mt today.

The most-traded SHFE 2101 zinc contract added 0.35% to close at 21,300 yuan/mt in overnight trading, with open interest falling 1,307 lots to 90,744 lots. Orders at galvanising producers in north China improved as environmental restrictions eased, and orders from overseas at die-cast zinc alloy producers also increased, an SMM survey showed. The January contract is likely to move between 21,000-21,500 yuan/mt, while spot premiums for domestic 0# Shuangyan will be seen lower at 110-130 yuan/mt against the contract.

Nickel: The most-liquid SHFE 2102 nickel contract closed flat at 121,110 yuan/mt in overnight trading.

Lead: Three-month LME lead advanced 0.29% to end at $2,095/mt on Tuesday, posting a two-day winning streak, as positive vaccine news boosted market sentiment.

The most-active SHFE 2101 lead contract closed 0.67% firmer at 15,090 yuan/mt in overnight trading.

Tin: Three-month LME tin climbed 0.42% to close at an intraday high of $19,195/mt on Tuesday. Relatively tight market supply underpinned tin prices. The dollar edged higher on Tuesday in choppy trading, taking a breather from a sell-off that took it to its lowest level in more than 2-1/2 years last week, while sterling slipped as investors awaited the outcome of Brexit trade-deal talks. Pressure above will be seen from the 20,000 mark.

The most-liquid SHFE 2102 tin contract rose 0.23% to end at 149,670 yuan/mt in overnight trading, and is expected to remain strong today with pressure above at 150,000 yuan/mt.