SMM Evening Comments (Aug 13): Shanghai nonferrous metals closed mostly higher, tin fell 1%

SHANGHAI, Aug 13 (SMM) – SHFE nonferrous metals steadied on Thursday August 13, holding onto overnight gains, as dollar lost ground amid doubts about US coronavirus-related relief bill.

Shanghai nonferrous metals, except for lead and tin, traded higher today. Copper increased 0.7%, aluminium added 0.81%, nickel rose 0.47% and zinc advanced 0.08%, while lead shed 0.74% and tin fell 1%.

The ferrous complex closed mixed. Iron ore added 0.85%, hot-rolled coil increased 0.82% while rebar shed 0.08%.

SMM data showed that aluminium billet stocks across the five major consumption areas — Foshan, Wuxi, Huzhou, Changzhou and Nanchang — in China fell 6,400 mt from a week ago to 69,400 mt as of Thursday August 13.

Primary aluminium ingot inventories in China increased this week, showed SMM data. Social inventories of primary aluminium ingots across eight consumption areas in China, including SHFE warrants, rose 12,000 mt on week to 737,000 mt as of Thursday August 13, with stocks in Wuxi expanding significantly.

Crude oil prices slid on Thursday after the Organisation of the Petroleum Exporting Countries (OPEC) said it forecast fuel demand to shrink more than expected, even as US government data showing a drop in inventories suggested demand is returning despite the coronavirus pandemic.

Copper: The most-traded SHFE 2009 copper contract opened at an intraday high of 50,750 yuan/mt, and closed 0.7% higher at 50,410 yuan/mt as the dollar index fell, after sliding to an intraday low of 50,290 yuan/mt. The US consumer price index (CPI) for July recorded the largest month-on-month increase of 0.6% in nearly 20 years, which greatly exceeded expectations, and inflation prospect remained unchanged. The continued stalemate of the US economic stimulus bill and the cautious market sentiment still suppressed the upward trend of copper prices. The ore processing capacity of the Chuquicamata underground copper mining project under Chile Copper Mines will rapidly increase, and the transportation issue of Peru's copper ore was basically solved, which is expected ease the tight supply of domestic and foreign copper concentrate after August. Operating rates across domestic copper processors are likely to slide in August given the low copper consumption season, showed an SMM survey. Whether the contract could maintain its upward trend will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2009 aluminium contract finished the day 0.81% higher at 14,360 yuan/mt, with strong support from the 40-day moving average. Open interest lost 3,050 lots to 115,000 lots. Domestic aluminum ingot inventories increased at a slower pace on Thursday. SMM will keep a close watch on the inventories and the price spread between futures contracts.

Zinc: The most-active SHFE 2009 contract generated a W-shaped movement on Thursday, closing up 0.08% on the day at 19,390 yuan/mt. Open interest fell 881 lots to 83,760 lots. The contract is expected to move rangebound tonight.

Nickel: The most-traded SHFE 2010 nickel contract climbed to an intraday high of 113,060 yuan/mt in morning trading, and finished the day 0.47% higher at 112,560 yuan/mt. Whether the contract could rebound will be monitored tonight.

Lead: The most-active SHFE 2009 lead contract closed 0.74% weaker at 16,010 yuan/mt today in choppy trading. The contract is expected to fluctuate around 16,000 yuan/mt in the short term. Whether the contract could break above the 10-day moving average will be monitored tonight.

Tin: The most-liquid SHFE 2010 tin contract bounced back from an intraday low of 141,520 yuan/mt to an intraday high of 144,250 yuan/mt, before paring some gains and ending 1% lower at 141,600 yuan/mt today. It is expected to move below the 20-day moving average of 145,000 yuan/mt tonight.