SMM Morning Comments (Jul 3): Shanghai base metals mixed following better-than-expected US jobs data

Published: Jul 03, 2020 10:06 (GMT+8)

Save

In overnight trading, nonferrous metals on the SHFE traded mostly higher. Nickel jumped 1.1% to lead the way higher, tin climbed 0.8%, copper gained 0.3% and zinc advanced 0.2%, while aluminium stayed flat. Lead shed 0.6%.

SHANGHAI, Jul 3 (SMM) – Shanghai nonferrous metals traded on a mixed note on Friday morning, as investors assessed the latest US jobs report. Nickel, lead and aluminium rose, while copper, zinc and lead saw volatile trading.

LME base metals, except for zinc and lead, closed higher on Thursday, though their gains were no more than 0.7%. Tin rose nearly 0.7% to lead the gains, copper climbed 0.6%, nickel advanced 0.5%, aluminium inched up 0.03%, while zinc dipped 0.1% and lead fell 0.2%.

The US Labor Department reported on Thursday that US nonfarm payrolls increased by 4.8 million jobs in June, the most since the government started keeping records in 1939 and beating expectations. The unemployment rate fell to 11.1% from 13.3% in May.

A separate report from the Labor Department, however, showed that initial US jobless claims rose by 1.427 million in the week ending June 27. The data also showed the number of continuing claims — the number of people receiving unemployment benefits for consecutive weeks — rose to 19.29 million, an increase of about 59,000.

US markets will be closed on Friday for the July Fourth holiday.

In China, a private survey showed Friday that China’s services sector showed it growing at its fastest pace in over a decade in June, with the Caixin/Markit services purchasing managers’ index (PMI) coming in at 58.4 for the month. That was the highest print since April 2010, and compared with May’s 55.0 reading. The 50 level in PMI readings separates growth from contraction on a monthly basis.

Copper: Three-month LME copper hit a new more than five-month high of $6,120/mt before closing the day 0.62% higher at $6,093.5/mt. It is expected to trade between $6,060-6,120/mt today.

The most-active SHFE contract strengthened 0.26% to 49,380 yuan/mt in volatile trading overnight. It is likely to move between 49,200-49,500 yuan/mt. Spot premiums are seen lower to a maximum of 20 yuan/mt as weak demand and high prices forces traders to slash their quotes.

Concerns over ore supply remain supportive of copper prices. Chilean copper miner Antofagasta has agreed to supply Chinese smelters Tongling Nonferrous and Jiangxi Copper with copper concentrates in the first half of 2021 at treatment and refining charges (TC/RCs) of $60.8/mt and 6.08 cents/lb.

Aluminium: Three-month LME aluminium was little changed in choppy trade on Thursday, rebounding from a session-low of $1,613/mt to a more than three-week high of $1,630/mt before ending at $1,624/mt.

The most-liquid SHFE August contract also capped a volatile trading session overnight and closed flat at 13,980 yuan/mt.

SMM data showed that social inventories of primary aluminium ingots in China continued to fall this week, while those of aluminium billet rebounded.

Zinc: Three-month LME zinc eased after notching a session high of $2,075/mt as longs were cautious, and closed the day 0.12% lower at $2,044/mt. LME zinc inventories continued to edge lower on Thursday, falling 0.02% or 25 mt to 122,525 mt. Pause on economic reopening in some regions amid the resurgence of coronavirus cases, and high US unemployment rate weighed on LME zinc, which is expected to trade between $2,010-2,060/mt today.

The most-active SHFE August contract gained 0.21% to 16,725 yuan/mt in volatile trading overnight, with support from the 20-day moving average. Weakening consumption, easing ore supply tightness and expectations of greater supply with smelters recovering or ramping up production, limit upside in SHFE zinc. The SHFE August contract is expected to trade at 16,400-16,900 yuan/mt today with spot premiums for 0# domestic Shuangyan at 80-90 yuan/mt over the July contract.

Nickel: Three-month LME nickel hit a two-week high of $12,965/mt in early European trading hours, reversing earlier, moderate losses, before it closed up 0.54% at $12,920/mt. The contract has risen for five consecutive trading days, standing above the five-60 day moving averages and near the upper Bollinger band. Whether it could shrug off resistance at the 13,000 mark will come under scrutiny.

The most-active SHFE August contract rose to its highest since June 22 at 103,400 yuan/mt before stabilising to finish overnight trading 1.07% higher at 103,250 yuan/mt. The load-up of long positions primarily accounted for overnight gains in SHFE nickel. Whether the contract could break above the 103,400 mark will come under scrutiny today.

Lead: Three-month LME lead weakened 0.2% to end at $1,772.5/mt on Thursday in choppy trading. It is expected remain rangebound in the short term, with support at the 20-day moving average.

The most-traded SHFE contract slipped to a session-low of 14,650 yuan/mt, before recovering some ground to end down 0.64% at 14,730 yuan/mt in overnight trading. With support at the 10-day moving average, the contract is expected to hang onto its recent highs.

Tin: Three-month LME tin fluctuated to end at a session-high of $16,870/mt, up 0.66% on the day. It now sits around the five-, 10- and 20-day moving averages, and faces pressure at 16,950.

The most-active SHFE September contract rose overnight, and gains accelerated shortly before closing. It hit a more than five-month high of 139,500 yuan/mt before ending up 0.79% at 139,320 yuan/mt. Pressure is seen at previous highs around 140,500.

Morning comments Copper Aluminium Zinc Lead Nickel 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

41 mins ago

China's Refined Copper Output Growth Expected to Slow Sharply in 2026 Amid Feedstock Constraints

China's refined copper production growth is expected to slow sharply in 2026 as smelters face tightening copper concentrate and scrap availability alongside weaker sulphuric acid prices, according to foreign media reports. Wood Mackenzie and Zijin Tianfeng Futures expect China's refined copper output to increase by around 3–3.4% in 2026, compared with growth of 10.4% in 2025. Reuters said this would represent the slowest annual growth rate since at least 2000 based on its review of official production data. Refined copper output growth stood at approximately 4% year on year during January-August. The slowdown is expected to become more pronounced in the fourth quarter as tighter scrap copper supply adds to the existing shortage of copper concentrate. Reuters reported that a tax crackdown is expected to reduce scrap availability, further limiting smelters' ability to substitute secondary raw materials for concentrate when feedstock conditions tighten. Smelter economics have also come under pressure from lower sulphuric acid prices. Sulphuric acid, a major by-product of copper smelting, had previously helped offset extremely low copper concentrate treatment charges. According to Oilchem data cited by Reuters, Chinese sulphuric acid prices declined by around 11% during September. Seven Chinese copper smelters are reportedly planning equipment maintenance lasting between 30 and 60 days during October and November. Analysts at Zhuochuang estimate that the planned maintenance could reduce refined copper supply by approximately 80,000 mt. The concentrate shortage reflects a broader imbalance between rapidly expanding global smelting capacity and comparatively slower growth in mined copper supply. Recent temporary disruptions at major copper mines including Escondida, Las Bambas and El Teniente have added further pressure to concentrate availability. Slower refined copper production growth in China could reduce refined copper supply growth during the fourth quarter, particularly if planned smelter maintenance coincides with continued constraints in concentrate and scrap availability. The simultaneous decline in sulphuric acid prices is also weakening an important source of smelter revenue at a time when treatment charges remain under pressure. Attention will therefore remain on concentrate availability, scrap supply conditions and the scale of planned smelter maintenance during October and November.

41 mins ago

48 mins ago

Eldorado Gold Completes Skouries Grid Energization Ahead of Q4 Commercial Production

Eldorado Gold has completed the permanent grid connection and energization of its Skouries copper-gold mine in northern Greece, marking another key commissioning milestone as the project advances toward commercial production expected in the fourth quarter of 2026. The site was successfully energized following final inspection, testing and approval by the Greek transmission authority. Eldorado said the permanent connection to the national grid provides the long-term power infrastructure required to support continued commissioning and ramp-up of processing and mining systems across the operation. The milestone follows the recent achievement of first copper-gold concentrate production at Skouries on September 8. The company is now progressing commissioning and ramp-up activities as it moves toward steady-state operations and commercial production later this year. Skouries is a copper-gold operation being developed using a combination of conventional open-pit and underground mining methods. Based on the company's current mine plan, the operation is expected to produce an average of approximately 67 million lb, or around 30,400 mt, of copper per year over its mine life, alongside approximately 140,000 oz/year of gold. The permanent grid connection is particularly important for the operation of major process systems, including crushing, grinding, flotation, concentrate handling and tailings disposal, which require full site energization as commissioning advances. Completion of permanent grid energization removes an important infrastructure constraint at Skouries and supports the continued ramp-up of the project following first concentrate production earlier in September. With commercial production still targeted for Q4 2026, attention will now turn to the pace of commissioning and the transition toward steady-state operations. Once fully ramped up, Skouries is expected to become a meaningful new source of European copper supply, with average annual copper production of approximately 30,400 mt over the mine life.

48 mins ago

51 mins ago

Centinela Copper Mine Workers Approve Strike as Labour Talks Move to Mediation

Workers represented by two unions at Antofagasta Minerals' Centinela copper mine in northern Chile have voted overwhelmingly in favour of strike action after rejecting the company's latest collective bargaining offer. According to foreign media reports, 98.73% of union members voted in favour of a strike, with all eligible members participating in the vote. The Minera Esperanza and Distrito Centinela unions had previously urged their members to reject the company's proposal amid disagreements over employee benefits. The unions have argued that Antofagasta Minerals has declined to discuss equalising benefits for workers regardless of their union affiliation. Antofagasta Minerals does not comment on its ongoing collective bargaining negotiations. Despite the vote, a strike has not yet begun. The company and unions must now enter a mandatory five-day government-led mediation process before workers can legally begin strike action. The mediation period can be extended by another five days if both sides agree. Centinela is a major copper operation in Chile and produced 240,400 mt of copper in 2025. The outcome of the mediation process will therefore be closely watched for any potential impact on operations and copper supply. The 98.73% vote in favour of strike action represents an escalation in the labour negotiations at Centinela, but there has been no reported disruption to copper production at this stage. The mandatory mediation period provides an opportunity for the company and unions to reach an agreement before industrial action begins. Given Centinela's 2025 copper production of 240,400 mt, an extended work stoppage could create additional supply uncertainty, although the scale of any potential production impact cannot be estimated unless a strike begins and its duration becomes clearer.

51 mins ago