SMM Evening Comments (Jul 17): Shanghai base metals ended mixed as bearish sentiment eased

SHANGHAI, Jul 17 (SMM) – SHFE nonferrous metals closed mixed on Friday July 17, with copper zinc and tin recovering some losses from the previous three days. Bearish market sentiment eased as investors expected fresh economic stimulus from the US to see the country through its coronavirus outbreak.

Copper snapped a three-day losing streak and rebounded 0.33% on the day. Zinc recovered 0.88%, tin climbed 0.4%, while aluminium fell 0.28%, lead shed 1.09% and nickel eased 0.88%.

The ferrous complex traded mostly higher on Friday, as rebar rebounded 0.19%, hot-rolled coil edged up 0.03%, stainless steel grew 0.04% and coke advanced 2.59%. Meanwhile, iron ore continued to shrink by 0.42%. 

Copper: The most-traded SHFE September contract held onto gains from overnight and found support from the daily moving average, closing up 0.33% on the day at 51,410 yuan/mt. Open interest added 3,776 lots to 112,000 lots as longs loaded up their positions. Hopes around stimulus policy and sufficient liquidity in the market may support the red metal. The contract is expected to hold firm above the 10-day moving average and test the five-day moving average tonight. 

Aluminium: The most-liquid SHFE August contract slowed decline, ending down 0.28% on the day at 14,155 yuan/mt, as investors covered their short positions. Open interest shrank 6,471 lots to 122,892 lots. Fundamentals remain supportive of aluminium prices as social inventories stay at low levels. Any downward room in the contract would be limited. 

Zinc: The most-active SHFE September contract pared some gains from last night, finishing 0.88% higher on the day at 17,860 yuan/mt after bouncing back from an intraday low of 17,705 yuan/mt. SMM data showed a decline of 5,700 mt in social inventories of refined zinc this week, which lifted market sentiment. This, together with macro uncertainty, may keep the contract around the five-day moving average tonight. 

Nickel: The most-traded SHFE October contract continued to trade lower but at a slower pace. It closed the day 0.88% lower at 106,320 yuan/mt, after came off from an intraday high of 107,350 yuan/mt. Support remained from 106,000 yuan/mt, and that level will continue be monitored tonight. 

Nickel ore inventories across all Chinese ports declined 50,000 wmt from July 10 to 7.83 million wmt as of July 17, showed SMM data.

Lead: The most-active SHFE August contract traded with pressure from the daily moving average, ending the day 1.09% lower at 14,925 yuan/mt, after a rebound in the stock market lifted prices to a session high of 14,965 yuan/mt. A surge in lead social inventories in China this week reinforced concerns about weak consumption. This may see the contract testing support from the 20-day moving average, or 14,800 yuan/mt tonight. 

Tin: The most-liquid SHFE contract pulled back after climbed to a session high of 141,980 yuan/mt, ending the day 0.4% higher at 141,200 yuan/mt. It moved sideways between the 10- and 20- day moving averages, with pressure above expected from 142,500 yuan/mt.