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

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.