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November 6, 2020

SMM Morning Comments (Nov 6): Shanghai base metals performance mixed as US election uncertainty remains

SHANGHAI, Nov 6 (SMM) — Shanghai base metals traded mixed on Friday morning, as investors continue to wait for a result from the US election. Meanwhile, their counterparts on the LME were mostly higher.

 

Shanghai base metals closed mixed in overnight trading. Copper slid 0.14%, zinc declined 0.13% and tin weakened 0.02%, while aluminium climbed 0.1%, lead rose 0.38% and nickel increased 0.36%.

 

The LME complex rose for the most part. Nickel was the best performer with a rise of 0.94%. Copper advanced 0.44%, tin edged up 0.5%, zinc increased 0.71% and lead went up 0.11%, while aluminium fell 0.84%.

 

Aluminium: Three-month LME aluminium fell 0.84% to close at $1,892.5/mt on Thursday, with open interest rising to 748,000 lots. It is expected to trade between $1,870-1,910/mt today.

The most-liquid SHFE 2012 aluminium contract slid 0.3% to settle at 14,805 yuan/mt on Thursday night, and is likely to trade between 14,700-15,000 yuan/mt today.

 

Zinc: Three-month LME zinc rose 0.71% to close at $2,607/mt on Thursday. Zinc stocks at LME-listed warehouses fell 425 mt to 217,800 mt. Overnight, the weak trend of the US dollar combined with Biden's great hope of winning the US election boosted the hope of introducing larger stimulus measures, and the market optimism warmed up. It is likely to trade between $2,570-2,620/mt today.

The most-liquid SHFE 2012 zinc contract weakened 0.13% to end at 19,925 yuan/mt in overnight trading. According to an SMM survey, the refinery production in other areas was relatively stable in October, except for the refinery production in Shaanxi. In addition, the pandemic in the first two quarters of this year affected the output of some refineries. In order to complete the annual production plan, some refineries also started to rush work at the end of the year. China's refined zinc output increased month on month in October, and the supply side's support for zinc price weakened. At present, the US election is still going on, and Biden is ahead of Trump for the time being, but the election situation is stalemate, and the final result is still unpredictable with macro unstable factors. 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 rose 0.73% to close at 117,410 yuan/mt on Thursday. Open interests rose 4,039 lots to 101,000 lots. The macro trend is still unclear, and metals have been negatively correlated with the US dollar in recent days. Whether the contract could remain above 117,000 yuan/mt will be monitored today.

 

Lead: Three-month LME lead rose to an intraday high at $1,863.5/mt before repairing some gains to settle 0.11% higher at $1,840/mt on Thursday. The impact of the turmoil caused by the US election and the rebound of the US dollar index on the lead prices will come under scrutiny.

The most-active SHFE 2012 lead contract trended higher on Thursday night, ending 0.49% higher at 14,420 yuan/mt. Domestic lead prices are expected to keep fluctuating at low in the near term.

 

Tin: Three-month LME tin closed up 0.5% at $18,255/mt on Thursday, after hitting an intraday low at $18,130/mt earlier in the session. Macro events and the guiding role of the US dollar in the trend of LME tin will be monitored today. Support below will be seen from $17,900/mt today. Pressure above will be seen from $18,600/mt today.

The most-liquid SHFE 2101 tin contract closed down 0.02% at 146,060 yuan/mt on Thursday night. The market focuses on the macro situation and the guidance provided by LME tin. Support below will be seen from 144,500 yuan/mt today. Pressure above will be seen from 148,000 yuan/mt today.

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