SMM Morning Comments (Dec 31): Shanghai base metals were mostly lower, the LME complex set for a mixed start

SHANGHAI, Dec 31 (SMM) — Shanghai base metals fell for the most part on Thursday morning, while their counterparts on the LME set for a mixed start. 

Shanghai base metals closed mixed in overnight trading. Copper shed 0.48% and nickel slid 1.03%, while zinc added 0.1%, lead rose 1.09% and tin advanced 0.45%.

The LME complex were mostly higher on Wednesday. Aluminium added 0.68%, zinc added 0.51%, lead advanced 0.96% and tin firmed 0.5%, while copper edged down 0.03% and nickel slipped 0.74%. 

Copper: Three-month LME copper edged down 0.03% to close at $7,819/mt on Wednesday. The most-traded SHFE 2102 copper contract shed 0.48% to end at 58,200 yuan/mt in overnight trading. The new variant of coronavirus led to a surge in new infections. The U.K. government outlined plans on Wednesday to impose stricter coronavirus restrictions on millions of people across England. Lawmakers in Washington continue to disagree over direct payments to Americans that are part of an economic stimulus package amid the ongoing coronavirus pandemic. Senate Majority Leader Mitch McConnell blocked Senate Minority Leader Chuck Schumer’s effort to fast-track the bill, passed by the House late Monday, that would increase checks to $2,000 from $600.  LME copper is expected to trade between $7,800-7880/mt today, while SHFE copper between 58100-58600 yuan/mt, while spot copper will be traded between discounts of 160 yuan/mt and 80 yuan/mt.

Zinc: Three-month LME zinc settled 0.51% higher at $2,773/mt on Wednesday, after hitting a nearly three-week low at $2,750/mt earlier in the session.  Zinc stocks across LME-listed warehouses dropped by 3,325 mt or 1.62% to 202,425 mt. Overnight, the US dollar index registered a new low since April 2018, which lent support to metals prices. Investors are betting that an improving economic outlook as COVID-19 vaccines are rolled out and unprecedented fiscal and monetary stimulus will boost global growth and asset prices in 2021. LME zinc is expected to fluctuate between $2,760-2810/mt today.

The most-traded SHFE 2102 zinc contract inched up 0.1% to close at 20,940 yuan/mt in overnight trading, with open interest rising 1,062 lots to 87,750 lots. Lower treatment charges for zinc concentrate narrowed profits at smelters, while lower social inventories supported zinc prices. But weakened consumption of galvanising in north China was unfavourable to zinc prices. The February contract is likely to move between 20,800-21,300 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen at 150-160 yuan/mt against the January contract.

Nickel: The most-liquid SHFE 2103 nickel contract slid 1.03% to end at 124,450 yuan/mt in overnight trading, with open interest increasing 1,602 lots to 155,000 lots. Support below from the 123,000 mark will be monitored today.

Lead: Three-month LME advanced 0.96% to close at $1,991/mt on Wednesday. The most-traded SHFE 2102 lead contract ended 1.09% higher at 14,870 yuan/mt in overnight trading.

Tin: Three-month LME tin climbed 0.5% to close at $20,250/mt on Wednesday. LME tin stocks extended declines to 1,890 mt. Spot premiums increased to $228/mt, suggesting that overseas tin concentrate remained in tight supply. LME tin is expected to fluctuate between $19,900-20,500/mt today. 

The most-liquid SHFE 2103 tin contract gained 0.45% to end at 152,480 yuan/mt in overnight trading, with open interest adding 408 lots to 31,447 lots. SHFE tin is likely to fluctuate between 150,000-155,000 yuan/mt today.