SMM Morning Comments (Jun 30): Shanghai base metals extended gains as upbeat economic data outweighed virus fears

Published: Jun 30, 2020 10:08

Save

SHFE nonferrous metals traded higher across the board in Tuesday morning trade, extending gains from overnight, on the back of optimism from a record surge in US housing-market data and upbeat eurozone economic sentiment, even as the global coronavirus cases continued to climb.

SHANGHAI, Jun 30 (SMM) – SHFE nonferrous metals traded higher across the board in Tuesday morning trade, extending gains from overnight, on the back of optimism from a record surge in US housing-market data and upbeat eurozone economic sentiment, even as the global coronavirus cases continued to climb.

Zinc held onto increase from last night and traded more than 1% higher in early trades this morning. Nickel advanced over 1%, with tin steadily higher and adding about 1%.

Overnight, LME and SHFE base metals closed higher across the board. SHFE zinc led the gains with a rise of 1.38%. SHFE copper advanced 0.21%, aluminium grew 0.66%, lead went up 0.51%, nickel climbed 0.99%, and tin added 0.65%.

LME zinc increased 0.93%, copper rose 0.44%, aluminium climbed 0.97%, nickel closed up 0.83%, tin edged up 0.06%, and lead gained 0.76%.

Crude oil prices edged higher on Monday, following upbeat data from the US and Europe, but fears of a second wave of the pandemic kept prices from jumping further.

Copper: Three-month LME copper moved higher on Monday with investors cutting their shorts. It finished 0.44% higher on the day at $5,969/mt, with the most-active SHFE August contract gaining 0.21% to end at 48,450 yuan/mt, following a session high of 48,590 yuan/mt. A rise in the US equity market and lingering concerns about supply disruption amid the closure of Codelco’s Chuquicamata smelter supported the red metal. Today, the SHFE contract is seen trading between 48,400-48,700 yuan/mt with LME copper at $5,960-6,020/mt. Spot premiums will likely edge lower to 150-170 yuan/mt as elevated futures sideline consumers.

Aluminium: Three-month LME aluminium closed higher for the second consecutive session, ending at $1,613/mt, up 0.97% on the day. The most-active SHFE August contract trimmed some increase after it advanced to a session high of 13,795 yuan/mt, finishing higher on the day at 13,775 yuan/mt. It is expected to trade between 13,600-13,900 yuan/mt today with spot premiums at high levels amid tight supply.

Zinc: Three-month LME zinc followed the stocks market and crude oil prices higher on Monday, rising to a session high of $2064/mt and ending the day 0.93% higher at $2,055/mt. LME zinc inventories shrank 0.14%, or 175 mt, on Monday to 122,850 mt, remaining at high levels. Reescalation of the coronavirus outbreak overseas dimmed investors hope for a significant rise in consumption, and this may cap the gains in LME zinc. Trading range today is expected at $2,030-2,080/mt.
The most-active SHFE August contract climbed on a buildup of longs, as it hit a high of 16,900 yuan/mt and finished the day 1.38% higher at 16,875 yuan/mt. It regained losses from the previous session but the gradual recovery of mining operation will lift supplies and limit the upward momentum in prices. Today, the contract may hover between 16,500-17,000 yuan/mt with spot premiums of 0# Shuangyan zinc at 90-110 yuan/mt.

Nickel: Three-month LME nickel returned back above the daily moving average after it slipped to a session low of $12,565/mt, ending up 0.83% on the day at $12,770/mt. Opening at $12,795/mt today, LME nickel is seen testing pressure from $12,800/mt.
The most-liquid SHFE August contract gained 220 yuan/mt overnight and closed at 102,800 yuan/mt, with open interest down 3,761 lots to 82,845 lots. Pressure above from 103,000 yuan/mt will likely be tested today.

Lead: Three-month LME lead rallied during the European trading hours last night, rising to a session high of $1,803/mt and closing the day 0.76% higher at $1,797.5/mt. The most-active SHFE contract broke up its previous high and closed the day up 0.51% at 14,715 yuan/mt. The contract may expand its upward room in the near term.

Tin: Three-month LME tin consolidated within a broad band, as it bounced back from a low of $16,680/mt to hit a session high of $16,850/mt, ending up $10/mt on the day at $16,810/mt. With support from the 20-day moving average, it will face resistance from $17,200/mt today.
The most-traded SHFE contract was firm above the five- and 10- day moving averages, climbing up amid departing shorts to end at 138,360 yuan/mt, up 940 yuan/mt on the day. Pressure above is seen from a previous high of 139,500 yuan/mt.

Morning comments Futures movement Copper Aluminium Zinc Nickel Lead Tin

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

10 hours ago

Chile Allows Codelco to Retain Entire $2.42 Billion 2025 Profit as Copper Output Struggles

According to foreign media reports, Chile's government will allow state-owned copper producer Codelco to reinvest 100% of its 2025 profit, totaling approximately $2.42 billion, marking the first time the company has been permitted to retain all of its annual earnings since its establishment in 1976. The decision provides additional financial capacity for Codelco as it works to stabilise copper production while undertaking several capital-intensive projects aimed at extending the operating lives of its ageing mines. The company has accumulated more than $20 billion in debt, increasing pressure on its balance sheet as investment requirements remain elevated. In recent years, Codelco had typically been permitted to retain around 30% of its profits, with the majority transferred to the Chilean government. The financial support comes amid persistent weakness in Codelco's copper production. Following an internal review, the company revised its 2025 output to 1.308 million tonnes, almost 27,000 tonnes below its previous estimate. The revised figure represents Codelco's lowest annual production in nearly three decades and is approximately 19% below its 2021 output. Codelco's new leadership has indicated that improving profitability and project execution will take priority over pursuing aggressive production targets. The retained earnings are expected to provide greater flexibility to finance the company's investment programme internally, potentially reducing its reliance on additional borrowing while it works to improve operational performance. From a copper-market perspective, Codelco's ability to stabilise and eventually recover production remains significant given that the company accounts for around 5% of global copper supply. Allowing the miner to retain its entire 2025 profit strengthens its capacity to fund mine-renewal projects, but the impact on future copper supply will ultimately depend on whether the additional capital translates into improved project execution and a sustained recovery in production.

10 hours ago

12 hours ago

PT Freeport Indonesia Develops Kucing Liar Mine for Long-Term Copper and Gold Supply

According to foreign media reports, PT Freeport Indonesia is continuing development of the Kucing Liar underground copper-gold mine within the Grasberg minerals district in Central Papua, with initial mining targeted for 2029 and production expected to ramp up thereafter. The project is being developed as a long-term source of replacement supply as production from the Deep Mill Level Zone declines. Development of the underground deposit has been underway for several years and requires substantial investment in mine access and supporting underground infrastructure. Recent reports indicate that approximately $1.4 billion has already been invested, with a further roughly $4 billion expected through 2033 as development progresses. At full operating rates, Kucing Liar is expected to process approximately 130,000 tonnes of ore per day and produce around 750 million lb of copper annually, equivalent to roughly 340,000 tonnes, alongside approximately 735,000 oz of gold. Freeport-McMoRan currently estimates that the deposit could contribute more than 8 billion lb of copper through 2041. From a copper-market perspective, Kucing Liar represents a significant source of prospective long-term mine supply from the Grasberg district. Its development is particularly important because it is intended to help offset declining output from mature underground areas and sustain Freeport Indonesia's large-scale copper production over the longer term.

12 hours ago

14 hours ago

Downstream Raw Material Inventory Ample, Intraday Trading Sluggish [SMM Secondary Copper Daily Review]

14 hours ago