SMM Evening Comments (Aug 7): Shanghai nonferrous metals rose for the most part while ferrous metals declined across the board

SHANGHAI, Aug 7 (SMM) – SHFE nonferrous metals, except for copper, cruised higher on Friday August 7, but ferrous metals all declined.

Lead remained the best performer, surging 1.33%. Aluminum edged 0.07% higher, zinc added 0.6%, nickel advanced 0.22% and tin rose 0.14%. Copper fell 0.48%.

The ferrous complex all closed lower. Iron ore fell 1.05%, hot-rolled coil weakened 0.46% and rebar shed 0.6%. China’s iron ore imports increased 10.78% from June to 112.65 million mt in July, surging 23.77% on year, showed customs data.

Copper: The most-traded SHFE 2009 copper contract opened at an intraday high of 51,680 yuan/mt, and closed 0.48% weaker at 51,300 yuan/mt after sliding to an intraday low of 51,040 yuan/mt.

Escalating trade tensions between the US and China and rebounding US dollar index weighed on copper prices. Besides, rising copper imports and social inventories and poor demand also weakened support for copper prices. Whether the contract could remain above 51,000 yuan/mt will be watched tonight.

Aluminium: The most-traded SHFE 2009 aluminium contract trended higher after falling to a session low of 14,405 yuan/mt, and edged 0.07% firmer at 14,555 yuan/mt today. Open interest of near-month contracts declined, while that of forward-month contracts increased.

Zinc: The most-liquid SHFE 2009 zinc contract moved around the daily moving average earlier in the session, with strong pressure at 19,500 yuan/mt, but fell rapidly to a session low of 19,250 yuan/mt in the afternoon before regaining some ground to close 0.6% firmer at 19,430 yuan/mt. Zinc ingot social inventories shrank 9,800 mt this week, with Shanghai stocks fell to a new low in 2020, suggesting improved consumption after the wet season. However, zinc output will increase amid rising treatment charges, which will pressure zinc prices. The contract is expected to move rangebound tonight.

Nickel: The most-traded SHFE 2010 nickel contract fluctuated vigorously today, ending 0.22% higher at 115,080 yuan/mt after falling to a session low of 113,630 yuan/mt. Open interest declined 7,284 lots to 174,890 lots, but major long positions remained in the market. Whether the contract could maintain its upward trend will come under scrutiny tonight.

Lead: The most-active SHFE 2009 lead contract fluctuated between the daily moving average and 16,585 yuan/mt in the morning, but fell to an intraday low of 16,315 yuan/mt in the afternoon as longs reduced positions before recouping some gains to finish the day 1.33% firmer at 16,355 yuan/mt. SHFE lead is likely to remain strong in the short term amid the prospect of a high consumption season. Whether strength of longs could help the contract break above 16,500 yuan/mt will be monitored tonight.

Tin: The most-active SHFE 2010 tin contract climbed to an intraday high of 148,630 yuan/mt after the opening bell as longs accumulated, but later pared some gains and ended 0.14% higher at 146,530 yuan/mt today. Pressure above is seen at 148,500 yuan/mt tonight.