SMM Evening Comments (Jun 17): SHFE base metals closed mostly higher on recovery hopes

SHANGHAI, Jun 17 (SMM) – SHFE nonferrous metals, except for copper, closed higher on Wednesday, as investor sentiment was boosted by upbeat US economic data as well as hopes for more stimulus and COVID-19 treatment.

Zinc advanced 2% to lead the gains, tin and lead jumped more than 1.4%, nickel climbed 1.1%, aluminium rose 0.5%, while copper stayed flat. That followed a massive rally of the nonferrous complex on Tuesday, spurred by the return of monetary and fiscal stimulus into the spotlight.

On the LME, zinc, tin, lead and copper were higher as of 18:47 Beijing time, while aluminium and nickel weakened.

Warnings from the International Monetary Fund (IMF), concerns surrounding geopolitical flare-ups between countries in Asia and lingering fears of a second wave of COVID-19 infections, however, keep markets on edge. The dollar held firm against many of its rivals on Wednesday

Copper: The most-traded SHFE contract for July delivery hovered in a tight range during the daytime session, erasing moderate losses from overnight to close flat at 46,770 yuan/mt. It remains above the 10-day moving average and whether it could return above 47,000 will come under scrutiny. On the other hand, investors are rolling to the August contract, which saw open interest expanding over 4,300 lots on the day.

Aluminium: The most liquid SHFE July contract eased on profit-taking after it notched a new high of 13,965 yuan/mt since January 23 when saw the most actively traded contract closing at 14,100, in early morning trade. It closed up 0.51% at 13,840. SMM will release its weekly China aluminium inventory data on Thursday, which is likely to show a moderate decline amid increasing arrivals as smelters have step up shipments after prices surged.

Zinc: Gains in the most active SHFE July contract accelerated in afternoon trade due to aggressive buying. The contract surged 2.01% on the day to 16,750 yuan/mt, its highest close in a month. Continued tightness in ore supply and maintenance-induced production cuts at smelters underpinned zinc prices.

Nickel: The most traded SHFE contract for August delivery gave back most of earlier gains in the daytime session as longs took profits, and it closed 1.11% higher at 103,480 yuan/mt, holding onto overnight gains. It is likely to remain rangebound in the near term, with pressure at 105,000 and support at 102,000.

Lead: The most active SHFE July contract rose 1.41% to end at 14,360 yuan/mt, shortly after hitting a session-high of 14,395. It has broken above the 10-day moving average, and is likely to extend its gains tonight.

Tin: The most active SHFE August contract strengthened 1.43% on the day to end at 138,420 yuan/mt. It has stood above the five-day moving average and faces pressure at 139,500.