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SMM Morning Comments (Jul 13): Base metals mostly higher; Shanghai copper soared nearly 5% on mine supply concerns
Jul 13,2020 10:08CST
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Source:SMM
Copper outperformed on growing concerns over mine supply, with the most active contract on the SHFE soaring nearly 5% to the highest since mid-June 2018 at 53,000 yuan/mt.  

SHANGHAI, Jul 13 (SMM) – Nonferrous metals traded mostly higher on Monday morning, as investors appeared to look past rising number of coronavirus cases in the US and other regions.

 

Copper outperformed on growing concerns over mine supply, with the most active contract on the SHFE soaring nearly 5% to the highest since mid-June 2018 at 53,000 yuan/mt.  

 

Nonferrous metals traded sharply higher on Friday. On the LME, nickel surged 2.7% to lead the way higher, aluminium jumped 2.4%, copper soared 2.1%, zinc advanced 1.9% and lead rose 1.3%, while tin bucked the uptrend with a 0.3% loss.

 

On the SHFE, copper soared 2.8% to the biggest gainer in Friday night trading, zinc and lead climbed 2.4%, aluminium rose 2.2%, nickel advanced 1.8% and tin was up nearly 1%.

 

The US dollar index, which tracks the greenback against a basket of its peers, fell in the morning of Asian trading hours on Monday after posting its largest weekly percentage loss in a month last week. Oil prices, meanwhile, weakened, erasing gains from the previous session.

 

Copper: Three-month LME copper continued its rally on Friday, gaining 2.1% to $6,429/mt. For the week, it surged 6.88%, marking an eighth straight weekly gain and the biggest in nearly 22 months. It is expected to trade between $6,420-6,490/mt today.

The most-active SHFE August contract advanced 2.83% to 5,930 yuan/mt on Friday night, after scaling a two-year peak of 51,980 yuan/mt earlier in the session. It is likely to trade between 51,900-52,300 yuan/mt today. Spot prices are seen at premiums of 30-50 yuan/mt as downside is limited ahead of the expiry of the July contract.

Concerns over mine supply helped copper to outperform among the nonferrous complex. Workers at Antofagasta Minerals's Zaldivar copper mine in Chile have voted in favour of strike action after rejecting a pay offer, the mine's union said on Friday.

 

Aluminium: Three-month LME aluminium rose 2.43% to end at $1,689/mt on Friday, recovering from Thursday’s loss and posting a weekly gain of 4.78%. Last week’s percentage increase was the biggest in more than two years and marked the fourth straight week of gain. It is likely to move between $1,670-1,710/mt today.

The most-liquid SHFE August contract crept up 2.23% to close at a 10-month peak of 14,650 yuan/mt on Friday night. Continued tightness in east China spot availability also helped support prices of Shanghai futures contracts. The SHFE August contract is expected to move between 14,400-14,800 yuan/mt today, and SMM will report the change to social inventories of primary aluminium ingots in China over the weekend.

 

Zinc: Three-month LME zinc hit a new five-month peak of $2,194/mt on Friday before it finished the day 1.89% higher at $2,189/mt, registering a five-day winning streak. Five consecutive days of gains generated a weekly increase of 7.54%, marking the biggest since September 21, 2018 and following two weeks of losses in a row. Zinc inventories across LME warehouses rebounded on Friday, increasing 1.31%, or 1,600 mt to 123,375 mt. The contract is expected to rise to $2,150-2,200/mt today. 

The most-active SHFE August contract advanced 2.39% to 17,990 yuan/mt on Friday night, after notching its highest since January 23 at 18,015 earlier in the session. Expectations of demand revival in a high season added to the upward momentum in SHFE zinc. The SHFE August contract is expected to trade at 17,600-18,100 yuan/mt today. Spot premiums for 0# domestic Shuangyan are seen slightly lower at 30-50 yuan/mt over the July contract.

 

Nickel: Three-month LME nickel reversed an earlier slip to a new nearly six-month high of $13,570/mt on Friday, before ending up 2.69% at $13,560/mt. Friday’s sharp gain helped it recover from the plunge on Thursday and return above the five-day moving average, posting a weekly gain of 4.51%, the biggest in four months. Whether it could break above the 13,600 mark will come under scrutiny today. .

The most-active SHFE October contract surged 1.83% to 108,270 yuan/mt on Friday night, widening the divergence between Bollinger bands. Whether it could break above the 109,000 mark will come under scrutiny today.

 

Lead: Three-month LME lead rose to its highest in more than four months at $1,868/mt on Friday, before easing to end up 1.34% at $1,855/mt, registering a six-day winning streak. It was up 3.92% on the week, the biggest percentage weekly gain in five weeks.

The most-traded SHFE August contract climbed to the highest since January 21 at 15,505 yuan/mt on Friday night trading, before ending 2.35% higher at 15,450 yuan/mt. SHFE lead has entered a technical bull market, and is expected to extend its gains in the short term.

 

Tin: Three-month LME tin slipped to a one-week low of $16,820/mt, before recovering some ground to end 0.29% weaker at $17,200/mt on Friday. It was up 1.78% on the week, marking a second straight weekly gain.

The most-active SHFE September contract strengthened 0.95% to 141,740 yuan/mt on Friday night.

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