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October 19, 2020

SMM Morning Comments (Oct 19): Shanghai base metals traded mixed after the release of Chinese economic data

SHANGHAI, Oct 19 (SMM) — Shanghai base metals traded mixed on Monday morning after the release of a slew of Chinese economic data, while there counterparts on the LME rose across the board.


China's economic recovery disappointed in the third-quarter, increasing 4.9% from a year ago and falling short of analyst expectations, data from the National Bureau of Statistics showed on Monday

Retail sales rose 3.3% in September, for a 0.9% increase in the third quarter. For the first nine months of the year, retail sales contracted 7.2%.

Fixed asset investment rose 0.8% in the first three quarters of the year.

The official urban surveyed unemployment rate edged lower in September to 5.4%.

Industrial production rose 6.9% in September from a year ago, bringing total growth for the first nine months of the year to 1.2%.

Shanghai base metals closed mostly lower on Friday night. Copper slid 0.45%, zinc weakened 0.37%, lead fell 1% and tin shed 0.35%, while aluminium rose 1.23% and nickel strengthened 0.67%.

The LME complex performed similarly on Friday. Copper declined 0.75%, zinc shed 0.61%, lead declined 1.85% and tin dropped 0.22%, while aluminium climbed 0.49% and nickel rose 1.85%.

Copper: Three-month LME copper declined 0.75% to close at $6,728/mt on Friday, and is likely to move between $6,700-6,760/mt today.

The most-active SHFE 2011 copper contract weakened 0.45% to end at 51,250 yuan/mt on Friday night. It is expected to trade between 51,200-51,700 yuan/mt today, while spot premiums will be seen slightly lower at 170-230 yuan/mt today.

The prolonged second wave of COVID-19, no effective progress in negotiations of a US stimulus package and Brexit talks boosted risk-aversion sentiment, pressure copper futures. The union of supervisors at BHP´s Escondida mine in Chile said it had reached an agreement on a labor deal, averting the threat of a strike at the world´s largest copper deposit.

Aluminium: Three-month LME aluminium climbed to its highest since April at $1,872.5/mt on Friday before paring some gains to end 0.49% higher at $1,863.5/mt. It is expected to move between $1,840-1,880/mt today.

The most-liquid SHFE 2011 aluminium contract rose 1.23% to close at 14,855 yuan/mt on Friday night, and is likely to trade between 14,600-15,000 yuan/mt today.

Nickel: The most-active SHFE 2012 nickel contract rose 0.67% to settle at 119,370 yuan/mt on Friday night. Whether the contract could break above 120,000 yuan/mt today will be monitored.

In terms of fundamentals, nickel ore prices remained firm as its supply continued to be tight after the Philippines entered a wet season. NPI prices were also firm with support from raw material prices. Refined nickel supply is likely to be short in the near term due to its improved demand and small inflow of imported cargoes.

Zinc: Three-month LME zinc ended 0.61% weaker at $2,430/mt on Friday. Zinc stocks across LME-listed warehouses expanded 950 mt to 219,775 mt. Fading prospects for a US fiscal stimulus package before the Nov. 3 election, a renewed surge in global COVID-19 cases and uncertainties over the US presidential election drove up risk-off sentiment. LME zinc is likely to move between $2,400-2,450/mt today.

The most-traded SHFE 2011 zinc contract settled 0.37% lower at 19,045 yuan/mt on Friday night. Domestic zinc social inventories built up after the National Day holidays as consumption of galvanising weakened slightly. But treatment charges continued to fall, suggesting a tightened supply of zinc concentrate, which provided support to zinc prices. The November contract is expected to trade between 18,900-19,400 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 170-190 yuan/mt.

Lead: Three-month LME lead fell 1.85% to settle at $1,750.5/mt, after hitting its lowest since late June at $1,750/mt earlier in the session.

The most-active SHFE 2011 lead contract declined 1% to end at 14,285/mt on Friday night, after hitting it's lowest in about four months at 14,280 yuan/mt earlier in the session.

Tin: Three-month LME tin shed 0.22% to end at $18,335/mt on Friday, after hitting its highest since early September at $18,450/mt earlier in the session. Weaker US dollar and output reduction at main producers induced by coronavirus underpinned tin prices. Fresh data showed that the COVID-19 pandemic imposed a great impact on Bolivia’s tin ore mining and smelting. LME tin is expected to move between $18,200-18,500/mt today.

The most-liquid SHFE 2012 tin contract weakened 0.35% to close at 145,860 yuan/mt on Friday night, and is likely to trade between 145,000-148,000 yuan/mt today.

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