SMM Morning Comments (Jul 16): Shanghai base metals extended decline, copper led the losses and dipped more than 2% 

Published: Jul 16, 2020 10:00
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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