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SMM Evening Comments (Jul 14): Shanghai base metals ended mixed on eased macro optimism
Jul 14,2020 18:48CST
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Source:SMM
SHFE nonferrous metals closed mixed on Tuesday July 14, following after they opened today lower across the broad, as investors risk aversion grew after the recent upward momentum in base metal prices. 

SHANGHAI, Jul 14 (SMM) – SHFE nonferrous metals closed mixed on Tuesday July 14, following after they opened today lower across the board, as investors risk aversion grew after the recent upward momentum in base metal prices. 


Percolating tensions between China and the US as well as a decline in crude oil prices also weighed on market sentiment and triggered the pullback in base metals. 


In a meeting later this week, OPEC and allies including Russia, a group known as OPEC+, are expected to ease their production cuts from a record 9.7 million barrels per day to 7.7 million bpd after a recovery in global oil demand.


Nickel extended increase with a rise of 1.18%. Tin climbed 0.42%, while zinc gave up gains from overnight and closed flat, copper shed 0.23%, aluminium slipped 1.13% and lead fell 0.29%. 


The ferrous complex, meanwhile, were mostly higher as iron ore traded robustly, adding 2.44% on the day on the back of reduced arrivals in China. Rebar rose 0.24%, hot-rolled coil edged up 0.4%, stainless steel grew 0.07%, while coke eased 0.47%.


Official data on Tuesday showed that China’s dollar-denominated exports and imports improved in June, as restrictions eased and countries around the world started to reopen their economies. 


China’s exports rose by 0.5% from a year earlier in June, a sharp improvement from a 3.3% slump in May. Imports rose 2.7% year on year in June, as compared with May's -16.7% and marking the first monthly import growth since December 2019.


Copper: The most-traded SHFE contract switched to the September contract, which traded below the daily moving average with an intraday low of 51,800 yuan/mt, and closed at 52,190 yuan/mt, down 0.23% on the day. Open interest increased 3,033 lots to 111,000 lots. The KDJ indicators expanded downwards, but the contract has not changed an overall upward trend. Tonight, the contract may follow its LME counterpart and continue to test levels above. 


Aluminium: The most-liquid SHFE August contract gave up gains from Monday and fell to a session low of 14,465 yuan/mt, before it pared some losses and closed 1.13% lower on the day at 14,485 yuan/mt. Open interest fell 6764 lots to 142136 lots as investor covered their longs. Fundamentals may remain supportive of aluminium prices tonight. 


Zinc: The SHFE August contract retreated as bullish market sentiment faded following a pullback in crude oil futures and US stock market. The contract slipped to a session low of 17,825 yuan/mt and pared losses to close flat at 17,945 yuan/mt. Open interest grew 4,466 lots to 85,301 lots. Little development on fundamentals may see the contract stabilising at high levels tonight. 


Nickel: The most-traded SHFE October contract trimmed some gains from overnight but still ended higher at 109,050 yuan/mt, up 1.18% on the day, following an intraday low of 108,300 yuan/mt. Open interest grew 3,815 lots to 149,953 lots. With lingering support from longs, the contract may test pressure from 110,000 yuan/mt tonight. 

China’s primary nickel market will be in a wide surplus this year, as the coronavirus crisis takes its toll and given the aggressive nickel pig iron (NPI) capacity expansion in Indonesia, said SMM senior analyst Rachel Liu at the 5th China International NiCoLi Summit in Ningbo on Tuesday. 


Lead: The most-active SHFE August contract fell below the daily moving average amid a broad decline in base metals, hitting an intraday low of 15,295 yuan/mt and ending the day 0.29% lower at 15,365 yuan/mt. Open interest shrank 2,776 lots to 22,292 lots. The price spread between the August and September contracts has narrowed to around 75 yuan/mt, suggesting a shift of capitals to forward contract. 


Tin: The most-liquid SHFE September contract bounced back swiftly after dipped to a session low of 141,670 yuan/mt, closing at 142,740 yuan/mt, 600 yuan/mt higher on the day. Support is seen from the five-day moving average, or 141,500 yuan/mt. 

 

 

Evening comments
Futures movement
Copper
Aluminium
Zinc
Nickle
Lead
Tin

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