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SMM Morning Comments (Jun 29): Shanghai base metals mixed on return from holiday
Jun 29,2020 10:01CST
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Source:SMM
SHFE nonferrous metals traded mixed on the morning of Monday June 29 as the market returned from the three-day Dragon Boat Festival holiday. Investors continued to assess the prospects of economic recovery from the coronavirus pandemic.

SHANGHAI, Jun 29 (SMM) – SHFE nonferrous metals traded mixed on the morning of Monday June 29 as the market returned from the three-day Dragon Boat Festival holiday. Investors continued to assess the prospects of economic recovery from the coronavirus pandemic.


Copper moved higher and added more than 1% in early trades this morning. Aluminium grew some 0.5%, lead advanced as much as 1.7%, while zinc, tin and nickel showed downward trends with nickel losing around 1% as of 10:00 CST. 


LME base metals traded on a mixed note last Friday. Copper expanded 0.1% on concerns about supply disruption from the world’s top copper producer Chile. Chile’s Codelco has closed its Chuquicamata smelter and refinery to prevent a further spread of COVID-19 among its staff.


LME aluminium climbed 1.69%, nickel added 1.56%, tin grew 1.45%, while zinc slipped 0.73% and lead eased 0.08%.


Oil prices erased earlier gains on last Friday, weighed by worries about rising new coronavirus cases in the US and expectations of US output edging up while crude stockpiles linger at record highs. This came after record US crude inventory data dragged prices on Wednesday. 


Copper: Three-month LME copper climbed to as high as $6,006/mt last Friday night, before it finished the day 0.1% higher at $5,943/mt. Concerns about raw materials supply disruption following the closure of Codelco’s smelter and refinery supported the red metal while a spike in new cases of US coronavirus continued to weigh on investors sentiment. SMM expects LME copper to hover between $5,900-5,960/mt with the most-active SHFE contract at 47,800-48,300 yuan/mt today. Spot premiums may hold firm at highs of 180-210 yuan/mt as domestic inventories extend a downward trend. 


Aluminium: Three-month LME aluminium bounced back after slipped in the second half of last week, ending Friday at $1,597.5/mt, up 1.69% on the day with investors covering their shorts. Investor reaction to the ongoing coronavirus situation in the US will continue to be watched.
As domestic spot supply remains tight, the most-traded SHFE contract is seen trading at 13,570-13,950 yuan/mt today with spot premiums at 200-220 yuan/mt. 


Zinc: Three-month LME zinc failed to extend the increase from Thursday as fears over the resurgence of a second wave of the pandemic dragged prices from a session high of $2,071.5/mt last Friday, settling it lower at $2,036/mt. It is expected to trade between $2,010-2,060/mt today with the most-liquid SHFE contract at 16,400-16,900 yuan/mt. Premiums of 0# domestic Shuangyan zinc are seen at 80-100 yuan/mt. 


Nickel: Three-month LME nickel broke up several moving averages above to test pressure from $12,800/mt, ending up 1.56% on the day at $12,665/mt, as better-than-expected economic data from the US lent support. The K-indictor was firm above the 40-day moving average. Trading range is seen between $12,500-13,100/mt today with the most-traded SHFE contract at 100,500-106,000 yuan/mt. 
Domestic consumers slightly restocked spot nickel before the Dragon Boat Festival holiday but the premiums stayed weak. While some stainless steel mills plan for maintenance as the slack season sets in, rigid demand from most other stainless steel plants remains supportive of nickel prices amid a supply glut in the domestic market. 


Lead: Three-month LME lead consolidated at high levels even as it closed last Friday 0.08% lower on the day at $1,784/mt. 


Tin: Three-month LME tin recovered last Friday while it lost a combined 0.3% during the three-day Dragon Boat Festival holiday starting from June 24. It finished Friday at $16,800/mt, following a low of $16,405/mt over the three days. Pressure above is seen from $17,300/mt, with the most-active SHFE contract facing resistance from 139,500 yuan/mt today. 

 

 

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