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November 10, 2020

SMM Morning Comments (Nov 10): Shanghai base metals were mostly higher following positive coronavirus vaccine development

SHANGHAI, Nov 10 (SMM) — Nonferrous metals on the SHFE were mostly higher on Tuesday morning, and their counterparts on the LME traded mixed, as investors in the region react to positive developments overnight on the coronavirus vaccine front.


Shanghai base metals mostly advanced in overnight trading. Copper added 0.13%, zinc inched up 0.59%, lead climbed 0.45% and nickel strengthened 1.47%, while tin weakened 0.29% and aluminium shed 0.34%.


The LME complex closed mixed. Aluminium added 0.05%, nickel rose 2.93% and zinc climbed 0.57%, while copper weakened 0.13%, tin shed 0.27% and lead slid 0.03%.


Copper: Three-month LME copper fell 0.13% to end at $6,938/mt on Monday, and is likely to trade between $6,920-7,000/mt today.

The most-active SHFE 2012 copper contract advanced 0.5% to close at 52,100 yuan/mt in overnight trading, and it is expected to move between 51,800-52,300 yuan/mt today, while spot premiums will be seen at 110-180 yuan/mt.

Great progress was made in vaccine research and development yesterday. Pfizer and BioNTech announced that the effective rate of vaccine in COVID-19 was over 90%. The market was boosted by the double benefits of general election and vaccine, which prompted the European and American stock markets to rise across the board, and several stock indexes hit record highs. The contract fluctuated at night, and the good news enhanced investors' optimistic attitude. In the late session, affected by the rise of the US dollar index, it dropped significantly and repaired all the gains at night. China Consumer Price Index (CPI) for October to be released today, and whether it can give upward momentum to copper futures will be monitored.


Aluminium: Three-month LME aluminium rose 0.05% to close at $1,902/mt on Monday, with open interest falling to 746,000 lots. It is expected to trade between $1,880-1,940/mt today. 

The most-liquid SHFE 2012 aluminium contract slid 0.1% to settle at 14,855 yuan/mt on Monday night, and is likely to trade between 14,700-15,100 yuan/mt today.


Zinc: Three-month LME zinc rose 0.57% to close at $2,652/mt on Monday. Zinc stocks at LME-listed warehouses rose 1,500 mt to 219,300 mt. After Biden was elected president of the United States, investors were optimistic about global trade, which was boosted by the good news of vaccine development in COVID-19. The contract is likely to trade between $2,630-2,680/mt today.

The most-liquid SHFE 2012 zinc contract added 0.64% to end at 20,375 yuan/mt in overnight trading. According to an SMM survey, social inventories increased, the spot market turnover was tepid, and the tension of the supply side of zinc ore had not been transmitted to the smelters. Considering the boost from macro favorable news, it is expected that SHFE zinc will keep wide fluctuation in the near term. The December zinc contract is expected to move between 20,000-20,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 140-150 yuan/mt.


Nickel: The most-active SHFE 2102 nickel contract rose 1.47% to close at 118,400 yuan/mt on Friday. Open interests fell 223 lots to 115,000 lots. Stimulated by the news that COVID-19 vaccine has made remarkable progress, the three major stock indexes hit a record high last night. US stocks and European stocks soared, and safe-haven metals such as gold and silver plummeted. However, it will actually take a long time for the news to be fed back to the fundamentals of major metals. The stimulation of information will gradually cool down, and the possibility of slightly driving metals to rise still exists. Recently, macro events frequently occur, and commodities are greatly affected and fluctuated. The contract will test pressure from 119,000 yuan/mt.


Lead: Three-month LME lead came off an intraday high at $1,864.5/mt to an intraday low at $1,826.5/mt before reversing some losses to settle 0.03% weaker at $1,832.5/mt on Monday. Impact of fluctuation of US dollar index on market will come under scrutiny.

The most-active SHFE 2012 lead contract trended higher on Monday night, ending 0.45% higher at 14,560 yuan/mt. Factors such as slightly wider supply in the spot market should be monitored before winter stockpiling.


Tin: Three-month LME tin closed down 0.27% at $18,355/mt on Monday, after hitting an intraday low at $18,275/mt earlier in the session. The guiding role of the US dollar to LME tin will be monitored. Pressure above will be seen from $18,700/mt today. Support below will be seen from 180,000 yuan/mt today.

The most-liquid SHFE 2101 tin contract closed down 0.07% at 146,370 yuan/mt on Monday night. Support below will be seen from 145,000 yuan/mt today. Pressure above will be seen from 148,000 yuan/mt today.

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