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SMM Morning Comments (Jul 16): Shanghai base metals extended decline, copper led the losses and dipped more than 2% 
Jul 16,2020 10:00CST
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Source:SMM
SHFE nonferrous metals opened lower across the board on Thursday July 16, extending losses from last night, as investors risk aversion grew amid uncertainty over the coronavirus pandemic and US-China tensions.

SHANGHAI, Jul 16 (SMM) – SHFE nonferrous metals opened lower across the board on Thursday July 16, extending losses from last night, as investors risk aversion grew amid uncertainty over the coronavirus pandemic and US-China tensions. 


Copper fell as much as 2.8% in early trades this morning. Lead slipped close to 2% and nickel lost more than 1%. 


Overnight, SHFE base metals continued to end lower across the board while LME nonferrous metals traded mixed. SHFE copper led the losses and slipped 2.25%. Aluminium dropped 1.24%, zinc eased 0.61%, lead dipped 1.69%, nickel fell 0.66% and tin went down 0.88%. Rebar shed 0.29% and stainless steel decreased by 1.03%. 


LME copper fell with its SHFE counterpart and closed down 1.62%. Aluminium shed 0.24%, nickel declined 0.48%, while zinc climbed 0.41%, tin expanded 0.06% and lead rose 0.14%.


Reports on progress toward a coronavirus vaccine cheered the market earlier on Wednesday, sending the US dollar to the lowest level in nearly five weeks.


Copper: Prices of copper extended a pullback last night as concerns about raw material supplies eased with a decline in new COVID-19 cases in Chile. Three-month LME copper closed down 1.62% on the day at $6,394.5/mt, with mounting pressure from short positions, and the most-active SHFE contract finished the day 1.75% lower at 51,220 yuan/mt. 

Positive news surrounding a coronavirus vaccine supported market sentiment and this may cap any downsides in copper prices today. Trading range today is expected at $6,380-6,440/mt for LME copper and at 51100-51500 yuan/mt for the SHFE contract. 


Aluminium: Three-month LME aluminium hovered in a narrow range and finished last night at $1,678.5/mt, after it recovered from a session low of $1,673/mt. The most-active SHFE August contract moved lower on eased macro optimism and closed lower on the day at 14,305 yuan/mt. Lingering support from the spot market will likely see the contract at 14,100-14,500 yuan/mt today. LME aluminium is expected to trade between $1,660-1,700/mt today. 


Zinc: Three-month LME zinc failed to test pressure from the Bollinger upper band during the European trading hours, before a buildup of long positions triggered a rebound and ended it at $2,201/mt, up 0.41% on the day. LME zinc inventories shrank 225 mt, or 0.18% on Wednesday to 122,975 mt. On the backdrop of concerns about the US-China tensions and economic recovery uncertainty, LME zinc is expected to trade between $2,160-2,210/mt today, with the most-traded SHFE contract at 17,400-17,900 yuan/mt.


Nickel: Three-month LME nickel found support from the 10-day moving average after it slipped to a session low of $13340/mt, ending down 0.48% on the day at $13,535/mt. It opened Thursday at $13,520/mt and support from the 10-day moving average, or $13,450/mt will be monitored. 
The most-active SHFE contract will likely test the 108,000 yuan/mt level today, following a session low of 106,870 yuan/mt last night. 


Lead: Three-month LME lead pared some gains after it climbed to an intraday high of $1,872.5/mt, ending higher the day at $1,853.5/mt. The most-active SHFE contract continued to retreat but stemmed decline at 15,055 yuan/mt, closing the day at 15,110 yuan/mt. Support below from the 10-day moving average will be watched. 


Tin: Three-month LME tin rebounded after slipped, ending 0.06% higher on the day at $17,295/mt after hitting a session high of $17,390/mt. It is forecasted to face pressure from $17,450/mt, with the most-liquid SHFE contract trading with support from the 20-day moving average, or 140,000 yuan/mt. 

 

 

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