SMM Evening Comments (Jul 13): Shanghai base metals rose across the board amid bullish sentiment

SHANGHAI, Jul 13 (SMM) – SHFE nonferrous metals closed higher across the board on Monday July 13, with copper once surging more than 5% on the back of supply concerns in Chile.

Copper led the gains on Monday and ended up 4.71%. Aluminium advanced 2.79%, lead grew 2.42%, zinc increased 2.42%, tin went up 2.49% and nickel expanded 2.06%.

The ferrous complex also traded higher. Iron ore climbed 4.8% as investors feared coronavirus crisis to deter iron ore shipments from Brazil. Rebar edged up 0.97%, hot-rolled coil climbed 1%, stainless steel grew 1.64% and coke went up 1.89%.

Copper: The most-traded SHFE August contract traded robustly on Monday, as loaded-up longs and departing shorts sent the contract to a more than two-year’s high of 53,510 yuan/mt, before it finished the day 4.71% higher at 52,880 yuan/mt. Open interest shrank 908 lots to 115,000 lots. Worries about copper mine production in Chile intensified after workers at Antofagasta Minerals's Zaldivar copper mine voted in favour of strike action after rejecting a pay offer. Supply woes together with bullish technical indicators will continue to support the red metal tonight. 

Aluminium: The most-liquid SHFE contract increased for the third consecutive day, rising to a session high of 14,860 yuan/mt as investors covered their shorts, and ending up 2.79% on the day at 14,730 yuan/mt. That was the biggest one-day increase over the past three months. The movement of short positions will continue to be monitored tonight. 

Zinc: The most-active SHFE contract has switched to the September contract, which broke up 18,000 yuan/mt to hit a session high of 18,135 yuan/mt, ending at 17,965 yuan/mt, up 2.42% on the day. Improved risk sentiment may keep prices buoyant tonight. 

Nickel: The most-traded SHFE October contract stayed above 108,000 yuan/mt, closing up 2,190 yuan/mt on the day at 108,510 yuan/mt following an intraday high of 109,240 yuan/mt. It has moved close to the rangebound levels at the start of the year. With support from the 10-day moving average, the contract may track its LME counterpart and test 110,000 yuan/mt tonight. 

Lead: The most-active SHFE August contract held onto gains from last Friday night, as it hovered above the daily moving average, testing the 15,520 yuan/mt level twice and closed the day 2.42% higher at 15,460 yuan/mt. It held above all moving averages today. Open interest declined 157 lots to 25,068 lots. SMM expects macro optimism to keep lead prices at highs in the near term. 

Tin: The most-liquid SHFE September contract extended gains from last Friday night, as it climbed to an intraday high of 144,570 yuan/mt on Monday and finished the day 2.49% higher at 143,900 yuan/mt. The next pressure above is seen from 146,500 yuan/mt if it breaks up 145,000 yuan/mt.