SMM Morning Comments (Jul 1): Shanghai base metals mixed on Wednesday morning, copper rose to more than 5-month high

Published: Jul 1, 2020 10:00

Save

SHFE nonferrous metals traded on a mixed note in Wednesday morning trade, following after a broad rally Tuesday with positive manufacturing data from China bolstering market sentiment.

SHANGHAI, Jul 1 (SMM) – SHFE nonferrous metals traded on a mixed note in Wednesday morning trade, following after a broad rally Tuesday with positive manufacturing data from China bolstering market sentiment.

LME and SHFE base metals ended mixed overnight. LME copper extended a rally and led the gains with a rise of 1.17%, amid investors worries about supply disruption from major miners caused by the pandemic. Aluminium grew 0.31%, nickel added 0.27%, while tin slipped 0.24%, zinc lost 0.88% and lead shed 1.06%.

SHFE copper advanced 0.76%, aluminium gained 0.72%, lead rose 0.65%, tin increased 0.12%, while zinc dropped 0.6% and nickel eased 0.84%.

A Caixin/Markit survey released on Wednesday showed China’s manufacturing activity expanded and beat expectations in June, with the Caixin/Markit manufacturing purchasing manager’s Index coming in at 51.2, up from 50.7 in May.

Data released on Tuesday showed the official PMI for China’s manufacturing sector also ticked up, to 50.9 in June from 50.6 in May.

The US Federal Reserve Chairman Jerome Powell on Tuesday expressed worry that a resurgence of coronavirus cases could undermine confidence in the economic recovery.

Meanwhile, he also committed to keeping interest rates low and providing its various liquidity facilities to ensure financial markets are operating properly.

Copper: Prices of copper continued to rise last night amid optimism outlook for demand resumption, with three-month LME copper stabilising above $6,000/mt to end 1.17% higher on the day at $6,039/mt and the most-active SHFE contract closing up 0.77% on the day at 48,930 yuan/mt. Upbeat data from US and China on Tuesday renewed global economic recovery hopes and supported the red metal. Today, trading ranges are expected at $6,030-6,100/mt for LME copper and at 49,000-49,400 yuan/mt for the SHFE contract. Spot premiums may moderate to 110-140 yuan/mt as downstream consumers were cautious about restocking.

Aluminium: Three-month LME aluminium hovered in a broad range between $1,615-1,626/mt, closing higher on the day at $1,618/mt, extending a price rally. The most-liquid SHFE August contract also trended upward, rising to a session high of 13,850 yuan/mt, which is close to the peak level back in January, and ending higher on the day at 13,900 yuan/mt. The contract is seen trading between 13800-14100 yuan/mt today with spot premiums elevated.

Zinc: Three-month LME zinc weakened overnight amid a buildup of shorts, which sent prices down to a session low of $2,037/mt before they finished at $2,037/mt, down 0.88% on the day. Open interest added 234 lots to 194,000 lots. LME zinc inventories continued to edge lower on Tuesday, falling 0.22% or 275 mt to stand at 122,575 mt. Little support from fundamentals dampened investors prospects for zinc prices, but expectations of more stimulus measures from governments will cap any downsides in prices. Today, LME zinc is seen trading between $2,010-2,060/mt.
The most-active SHFE August contract followed its LME counterpart lower last night. It accelerated declines near closing, hitting a session low of 16,690 yuan/mt and closed the day 100 yuan/mt lower at 16,705 yuan/mt. Support remained from the 10-day moving average. Trading range today is expected at 16,500-17,000 yuan/mt with spot premiums of 0# domestic Shuangyan zinc at 80-100 yuan/mt.

Nickel: Three-month LME nickel found support from the 10-day moving average after it slipped below the daily moving average to $12,710/mt. It closed at $12,805/mt Tuesday, up $35/mt, or 0.27% on the day. Opening at $12,805/mt today, LME nickel may trade with pressure from $12,800/mt.
The most-active SHFE August contract failed to hold onto gains from the daytime, as it broke down 102,000 yuan/mt and closed the day 1,030 yuan/mt lower at 101,750 yuan/mt. Support from 102,000 yuan/mt will be monitored today.

Lead: Three-month LME lead stemmed its increase amid a board decline in base metals during the European trading hours. It closed the day 1.06% lower at $1,778.5/mt, following a session low of $1,771/mt. The most-traded SHFE contract came off after climbed to a high of 14,915 yuan/mt, ending up 0.65% on the day at 14,800 yuan/mt. Technical indicators remain bullish for the short term.

Tin: Three-month LME tin gave up gains from the prior session as it pulled back from a session high of $16,945/mt to hit a low of $16,690/mt, before closing down $40/mt on the day at $16,770/mt. Support below is expected from $16,500/mt today.
The most-active SHFE August contract slipped on departing longs, ending overnight at 138,400 yuan/mt. It will likely trade with support below from 137,000 yuan/mt and pressure above from 139,000 yuan/mt today.

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

11 mins ago

Yingkou Jianfa Shenghai Phase I 300,000 mt Copper Cathode Project Smelting Furnace Starts Production, Pyrometallurgy System Enters Furnace Drying Stage

At 9:58 on September 12, the core smelting furnace of the pyrometallurgy system at Yingkou Jianfa Shenghai Nonferrous Metals & Chemicals Co., Ltd.'s multi-metal recovery project was successfully ignited, officially entering the furnace drying stage and marking a key step toward full-line commissioning and production. Public information shows that the Yingkou Jianfa Shenghai polymetallic complex gold-silver ore comprehensive recovery technology upgrade, relocation, and expansion project uses copper concentrates as its main raw material, with an overall planned capacity of 600,000 mt/year of copper cathode to be built in two phases, with capacity of 300,000 mt/year in each phase. Phase I is designed to produce 300,000 mt/year of copper cathode and 1.18 million mt/year of sulphuric acid, along with supporting systems for smelting, converting, anode refining, electrolysis, slag beneficiation, and precious metal recovery. After this ignition, the project will carry out standardized furnace drying and hot-state integrated trial runs across the entire system to verify equipment, instruments, interlocks, and automatic control systems. The project has not yet formally started raw material feeding and production; after furnace drying and system commissioning are completed, it will further advance the commissioning of Phase I's 300,000 mt/year copper cathode capacity. If the project is successfully brought into production, it is expected to increase copper smelting capacity in North China and further boost domestic demand for copper concentrate raw materials.

11 mins ago

15 hours ago

Alchemy Resources Starts Drilling Copper-Gold Targets at Yellow Mountain

Alchemy Resources announced on September 11 that reverse-circulation drilling has commenced across its Yellow Mountain and Overflow projects in New South Wales, Australia, with up to 15 holes planned during the latest exploration campaign. At the 80%-owned Yellow Mountain project, drilling will test extensions to previously identified copper-gold and polymetallic mineralisation, as well as two previously undrilled geophysical targets. Previous drilling at Yellow Mountain returned an intersection of 113 metres grading 1.17% copper equivalent, comprising 0.33% copper, 0.37 g/t gold, 24.3 g/t silver, 0.86% lead and 1.23% zinc. The latest drilling campaign is designed to test whether the known mineralised system extends into newly identified target areas. The program will also include drilling at the Overflow project, where Alchemy is targeting extensions to existing mineralisation along strike and at depth. Overflow currently hosts an inferred mineral resource of approximately 342,000 ounces of gold equivalent and contains gold, silver, copper, lead and zinc mineralisation. The commencement of drilling provides a near-term test of the scale and continuity of mineralisation at Yellow Mountain. The previously reported broad copper-gold-polymetallic intersection indicates potential for a sizeable mineralised system, while the newly defined geophysical targets provide additional exploration upside. Drilling results will be important in determining whether the mineralised footprint can be materially expanded.

15 hours ago

Freeport CEO Signals Likely Go-Ahead for $4.5 Billion Bagdad Copper Expansion

Freeport-McMoRan Chief Executive Officer Kathleen Quirk has indicated that the company expects to move forward with the proposed expansion of its Bagdad copper mine in Arizona, marking a stronger commitment to the project ahead of a formal investment decision. Speaking at the Jefferies Global Industrials Conference on September 10, Quirk said the project still requires input from Freeport's board but that she expects the company will proceed. She described the expansion as a roughly three-year construction project and noted that no major permitting hurdles are expected. Freeport's latest project estimates put capital expenditure for the Bagdad expansion at approximately US$4.5 billion, around 30% above the previous US$3.5 billion estimate, reflecting cost escalation, scope changes and additional engineering. The project would more than double concentrator capacity at Bagdad and is expected to add approximately 200–250 million lb, or around 91,000–113,000 tonnes, of copper production annually, alongside an additional 10–12 million lb of molybdenum. Bagdad currently has a reserve life exceeding 80 years. Freeport's Q2 2026 regulatory filing had described the project as being prepared for a potential investment decision during the second half of 2026. The latest comments therefore represent a more positive signal from management on the likelihood of development, although formal board approval has not yet been announced. A decision to proceed with Bagdad would represent one of Freeport's most significant near-term copper growth investments in the US. The potential addition of more than 90,000 tonnes per year of copper would materially increase Freeport's US output, although first production would remain several years away given the expected construction period. Attention will now turn to formal board approval and a final investment decision.

15 hours ago