SMM Evening Comments (Aug 27): Shanghai nonferrous metals ended mixed on eased macro optimism

SHANGHAI, Aug 27 (SMM) — SHFE nonferrous metals closed mixed on Thursday August 27, as the supply of nickle shrank and inventories of aluminium declined.

Sentiment was helped by positive news on the coronavirus vaccine front and solid US economic data. Moderna said its coronavirus vaccine showed promising results in a small trial of patients aged 56 and older. The company’s stock jumped 6% on the news. The US durable goods orders jumped by 11.2% in July, easily topping a 4.3% estimate from Refinitiv.

Tin, the best performer, rose 1.66%, nickel advanced 0.69% and copper climbed 0.37%, while zinc edged down 0.13%, aluminium weakened 0.03% and lead shed 1.23%.

SMM data showed that stocks of aluminium billet across the five major consumption areas – Foshan, Wuxi, Huzhou, Changzhou and Nanchang – in China shrank 3,800 mt from a week ago to 56,200 mt as of Thursday August 27.

Primary aluminium ingot inventories in China declined moderately this week, showed SMM data.

The ferrous complex closed mixed. Hot-rolled coil rose 0.54%, rebar advanced 0.24%, while iron ore shed 0.43%.

Copper: The most-traded SHFE 2010 copper contract rose to an intraday high of 51,660 yuan/mt after the opening bell, and closed 0.37% higher at 51,490 yuan/mt today. The Trump administration on Wednesday added 24 Chinese companies to a government list that bans them from buying American products, citing their role in helping the Chinese military construct artificial islands in the disputed South China Sea. Global investors worried about the trade relations between the two countries, and market risk preference was suppressed, which curbed copper prices. However, LME inventories continued to decline, and stood below 100,000 mt, which was at a historical low level, still supporting copper prices to some extent.

Aluminium: The most-liquid SHFE 2010 aluminium contract surged to an intraday high of 14,530 yuan/mt and ended 0.03% lower at 14,555 yuan/mt today. Open interest increased 2,709 lots to 113,000 lots as investors added their short positions. The basis and the flow of funds will come under scrutiny.

Zinc: The most-active SHFE 2010 zinc contract closed down 0.13% at 19,850 yuan/mt today. Open interest fell 470 lots to 105,000 lots. The contract is expected to fluctuate tonight.

Nickel: The most-traded SHFE 2011 nickel contract finished the day 0.69% higher at 119,430 yuan/mt. Open interest fell 4,189 lots to 146,000 lots. Whether the contract could move above 119,000 yuan/mt will be monitored tonight.

Lead: The most-traded SHFE 2010 lead contract slid to an intraday low of 15,605 yuan/mt, before regaining some ground to finish the day 1.23% lower at 15,640 yuan/mt. The contract fell for six consecutive days. Whether the contract could remain above 15,600 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2011 tin contract rose to an intraday high of 143,950 yuan/mt, before giving some gains to end 1.66% higher at 143,830 yuan/mt today. Open interest increased 1,162 lots to 22,232 lots. Pressure above is expected to around 144,500 yuan/mt.