SMM Morning Comments (Aug 4): Shanghai base metals broadly declined

SHANGHAI, Aug 4 (SMM) —Shanghai base metals were mostly lower on Tuesday, failing to hold onto overnight gains. Nonferrous metals on the LME were mixed as of 9:30 Beijing time. 

Nonferrous metals on the SHFE, except for zinc, cruised higher in overnight trading. Copper jumped 1.33%, aluminium surged 1.51%, nickel increased 1.52%, tin added 1.01% and lead edged up 0.19%. Zinc shed 0.45%.

Their counterparts on the LME were mixed on Monday. Copper increased 1.6%, aluminium surged 2.02%, lead advanced 0.27% and nickel added 1.06%, while zinc shed 0.13% and tin shriveled 0.14%.

The US dollar index, which measures the greenback against a basket of leading currencies, increased in the morning of Asian trading hours on Tuesday.

Meanwhile, oil prices edged lower as investors concerned about rising Covid-19 cases globally and OPEC+ members lifted output cuts. 

Copper: Three-month LME copper finished to day 1.6% firmer at $6,478/mt on Monday on positive economic data from Europe and the US. It is likely to move between $6,310-6,450/mt today.  

The most-traded SHFE 2009 copper contract closed 1.33% higher at 51,740 yuan/mt in overnight trading. Spot premiums of high-quality copper remained high amid its tight supply. The September contract is likely to trade between 51,600-52,000 yuan/mt today, and spot premiums are seen at 20-120 yuan/mt.

Aluminium: Three-month LME aluminium closed 2.02% higher at $1,744.5/mt on Monday.

The most-active SHFE 2009 aluminium contract extended earlier gains and ended 1.51% higher at 14,815 yuan/mt in overnight trading. It is expected to fluctuate at high levels today, with spot premiums at about 20 yuan/mt.

Zinc: Three-month LME zinc edged down 0.13% lower at $2,310/mt in choppy trading on Monday. LME zinc stocks fell 75 mt or 0.03% to 187,975 mt. Stronger US dollar and rising gold prices boosted risk aversion sentiment in markets, but upbeat July PMI limited the decline in LME zinc. It is expected to trade between $2,280-2,330/mt today.    

The most-traded SHFE 2009 zinc contract fluctuated vigorously in overnight trading. It gave up all earlier gains and ended 0.45% weaker at 18,835 yuan/mt. Domestic smelters are likely to increase output as treatment charges rise. The September contract is expected to move between 18,500-19,000 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen at 60-80 yuan/mt over the August contract.

Nickel: Three-month LME nickel surged to an intraday high of $14,025/mt before paring some gains and finishing the day 1.06% firmer at $13,960/mt on Monday. LME nickel opened at $13,945/mt on Tuesday, and pressure from $14,000/mt will come under scrutiny today.  

The most-liquid SHFE 2010 nickel contract closed 1.52% higher at 111,080 yuan/mt in overnight trading, after recouping earlier losses and rising to a session high of 111,500 yuan/mt. The contract will test resistance from 112,000 yuan/mt today.

Lead: Three-month LME lead closed 0.27% higher at $1,869/mt on Monday, after climbing to a session high of $1,889/mt, as the July PMI for the US beat expectations.   

The most-active SHFE lead rose to a session high of 16,015 yuan/mt before paring some gains to end just 0.19 firmer at 15,840 yuan/mt in overnight trading. Upbeat economic data from China and the US will keep lead prices fluctuating at high levels today.  

Tin: Three-month LME tin ended 0.14% weaker at $17,850/mt on Monday in choppy trading. LME tin inventories fell 20 mt to 3,875 mt. Support below is expected to be seen at $17,816/mt today.   

The most-active SHFE 2010 tin contract closed 1.01% higher at 147,130 yuan/mt in overnight trading. Pressure above will be seen at 147,500 yuan/mt today.