SMM Evening Comments (Jun 29): SHFE base metals closed mostly higher despite surge in coronavirus cases; copper hit 5-month peak

SHANGHAI, Jun 29 (SMM) – SHFE nonferrous metals, except for zinc and tin, rose on Monday, the first trading day after the Dragon Boat Festival holiday, despite a surge in coronavirus cases and the re-imposition of curbs to stop its spread in some regions.

Lead advanced 1.6% to lead the gains, copper jumped 1.3%, aluminium rose 1.1% and nickel climbed 0.9%, while tin shed 0.5% and zinc fell 0.7%.

Copper hit a more than five-month peak, clawing back all the losses since the imposition of coronavirus lockdown restrictions in China in late January, on growing fears that output will be disrupted in top producer Chile by worsening COVID-19 infections at mines.

On the LME, the nonferrous complex traded mixed. Copper, aluminium and nickel were higher as of 17:33 Beijing time, while lead gyrated between gains and losses. Zinc and tin cruised lower.

The dollar index, which tracks the greenback against a basket of its peers, fell to a low of 97.141 before recouping some losses.

Copper: The most-traded SHFE August contract strengthened 1.3% to finish the day at 48,380 yuan/mt, after hitting a high of 48,590, the highest since January 22, earlier in the session.

Chile's Codelco, the world's biggest copper miner, suspended refinery and foundry operations at its Chuquicamata division to prevent further spread of the new coronavirus.

Aluminium: The most-liquid SHFE contract advanced 1.1% to end at 13,775 yuan/mt, shortly after notching a session-high of 13,795.

SMM data showed that social inventories of primary aluminium ingots in China continued to fall over the holiday, decreasing 4,000 mt from last Wednesday June 24 to 718,000 mt as of Monday June 29.

Zinc: The most-active SHFE August contract reversed an earlier rebound to close down 0.66% at 16,625 yuan/mt. Fading concerns over mine supply and weakening consumption weighed on zinc prices, keeping the metal from following other nonferrous metals higher. The contract is expected to continue to move around the 10-day moving average tonight.

SMM data showed that social inventories of zinc ingots in China rose over the holiday, increasing 5,500 mt from last Wednesday June 24 to 223,900 mt as of Monday June 29.

Nickel: The most-traded SHFE August contract bounced after touching its lowest in nearly two weeks at 100,550 yuan/mt earlier in the session, and closed up 0.88% at 102,580. It is expected to continue its adjustment between 100,000-105,000 in the short term.

Lead: The most-active SHFE August contract resumed its rally and stood above the five-day moving average, gaining 1.63% to end at 14,685 yuan/mt. It is likely to extend its gains tonight.

Tin: The most-liquid SHFE August contract tumbled to a session-low of 136,820 yuan/mt in morning trade, before it recovered some ground to close down 0.46% at 137,420. Weak demand depressed spot prices and weighed on futures as well. Support is seen at 135,000.