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November 5, 2020

SMM Morning Comments (Nov 5): Shanghai base metals closed mixed as investors wait for US election result

SHANGHAI, Nov 5 (SMM) — Shanghai base metals traded mixed on Thursday morning, as investors continue to wait for the result of the US election. Meanwhile, there counterparts on the LME were mostly higher.


Shanghai base metals closed mixed in overnight trading. Copper slid 0.19%, lead declined 0.35% and nickel weakened 0.22%, while aluminium climbed 0.1%, zinc rose 0.38% and tin increased 0.36%.


The LME complex rose across the board. Lead was the best performer with a rise of 1.83%. Copper advanced 0.82%, tin edged up 0.58%, aluminium climbed 0.82%, zinc increased 1.67% and nickel went up 0.49%.


Aluminium: Three-month LME aluminium climbed 0.82% to close at $1,908.5/mt on Wednesday, with open interest rising to 747,000 lots. It is expected to trade between $1,870-1,930/mt today.

The most-liquid SHFE 2012 aluminium contract rose 0.34% to settle at 14,800 yuan/mt on Wednesday night, and is likely to trade between 14,600-15,000 yuan/mt today. Aluminum ingot inventories and changes of spot premium will come under scrutiny.


Zinc: Three-month LME zinc rose 1.67% to close at $2,588.5/mt on Wednesday. Zinc stocks at LME-listed warehouses fell 425 mt to 218,225 mt. Overnight, U. stocks closed up, while the US dollar was weak, which supported the general increase of nonferrous metals. The US Treasury Department raised the quarterly bond issuance to a record level, and the expectation of new stimulus measures after the US election boosted market sentiment. The contract will test pressure from $2,600/mt in the near term. It is likely to trade between $2,550-2,600/mt today.

The most-liquid SHFE 2012 zinc contract climbed 0.38% to end at 19,910 yuan/mt in overnight trading. On fundamentals, at the end of the year with the environmental impact, both the supply side and the demand side have partial reduction. From the perspective of TC continuous decline, the supply side disturbance is dominated. At present, Biden has an advantage in the general election, and the market is optimistic about the future stimulus bill. The contract is likely to keep fluctuating in the near term. The December zinc contract is expected to move between 19,500-20,000 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 150-160 yuan/mt.


Nickel: The most-active SHFE 2102 nickel contract fell 0.22% to close at 116,290 yuan/mt on Wenesday. Open interests rose 3,728 lots to 94,166 lots. Whether the election results can be released or not, and the fluctuation caused by macro sentiment change will be monitored today.


Lead: Three-month LME lead rose to an intraday high at $1,849/mt before repairing some gains to settle 1.83% higher at $1,838/mt on Wednesday. The impact of the rebound of the US dollar index on lead prices will come under scrutiny.

The most-active SHFE 2012 lead contract trended lower on Wednesday night, ending 0.35% lower at 14,260 yuan/mt. Domestic lead prices are expected to keep fluctuating at low in the near term.


Tin: Three-month LME tin closed up 0.58% at $18,165/mt on Wednesday, after hitting an intraday low at $17,825/mt earlier in the session. Strong willingness to risk in the market and rising stock market may limit the upward trend of the US dollar. The results of the US election and the guiding role of the US dollar in the trend of LME tin will be monitored today. Support below will be seen from $17,700/mt today. Pressure above will be seen from $18,300/mt today.

The most-liquid SHFE 2101 tin contract closed up 0.36% at 146,130 yuan/mt on Wednesday night. The market focuses on the macro situation and the guidance provided by LME tin. Support below will be seen from 144,000 yuan/mt today. Pressure above will be seen from 148,000 yuan/mt today.

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