SHANGHAI, Jul 20 (SMM) – SHFE nonferrous metals, except for aluminium, opened lower on Monday July 20, extending losses from last Friday night as the continued surge in global new cases of coronavirus kept investors cautious.
Copper gave up gains from last Friday and slipped slightly in early trades this morning. Nickel fell close to 2%, zinc lost nearly 1.5%, while aluminium extended increase from Friday and climbed more than 1%.
On last Friday night, LME and SHFE base metals traded lower for the most part. LME nickel lost 2.13%, zinc fell 1.47%, lead slipped 1.41%, tin fell 0.43% and aluminium dropped 0.33%. Copper, meanwhile, gained 0.42% and hovered at the highest level in two years, supported by raw material supply woes.
SHFE nickel shed 1.6%, zinc dropped 1.57%, lead fell 1.44%, tin went down 0.35%, while copper advanced 0.16% and aluminium added 1.17%.
Crude oil prices slipped on Friday on the backdrop of growing uncertainty about the global recovery in fuel demand as coronavirus cases surged in several countries, while major producers were set to ease output curbs.
Copper: Prices of copper moved higher last Friday as lingering concerns about the coronavirus impact on the mining front continued to support the red metal. Three-month LME copper gained 0.42% and finished at $6,437/mt with the most-active SHFE contract finishing marginally higher at 51,440 yuan/mt. Uncertainty around the COVID-19 development in the US and the US-China trade tensions sparked risk aversion in the market, lifting CMX gold prices above $1,810/ounce. Worries of mining disruption will remain supportive of copper prices today, with LME copper expected at $6,400-6,450/mt and the SHFE contract at 51,300-51,700 yuan/mt. Spot premiums are seen higher at 50-80 yuan/mt as consumers step up purchases on stabilising prices.
Aluminium: Three-month LME aluminium recovered during the American trading hours after it slipped to a session low of $1,652/mt. But it failed to reverse a downward trend, ending lower on the day at $1,663/mt. The most-active SHFE contract trimmed some decline from last Thursday, finishing at 14,265 yuan/mt last Friday night. With current low inventories of spot products, the SHFE contract is seen trading at 14000-14400 yuan/mt today, with LME aluminium at $1,650-1,690/mt.
Zinc: Three-month LME zinc extended a downward trend last Friday, falling below $2,200/mt and ended 1.47% lower on the day at $2,181.5/mt. Pressure remained from the Bollinger upper band despite support from the 10-day moving average. LME zinc inventories edged down 125 mt, or 0.1% last Friday to 122,400 mt.
The most-traded SHFE contract broke down the 10-day moving average and hit a session low of 17,525 yuan/mt, before it closed down 1.57% on the day at 17,555 yuan/mt. Open interest shrank 2,037 lots to 80,027 lots. Weakness in fundamentals weighed on the contract as a rally in zinc concentrate TCs bolstered production enthusiasm at smelters and grew market expectations of greater supply. Today, the contract is expected to hover at 17,400-17,900 yuan/mt with LME zinc at $2,170-2,220/mt.
Nickel: Three-month LME nickel followed its SHFE counterpart lower and slipped below the daily moving average, ending 2.56% lower on the day at $13,115/mt. Support remains strong from $13,000/mt, the 20-day moving average and the Bollinger middle band.
The most-active SHFE October contract declined on loaded-up short positions, which kept it below the 20-day moving average. It finished 1,710 yuan/mt lower on the day at 105,110 yuan/mt, with support seen from the Bollinger middle band today. It remains to be seen whether the contract could recover losses today.
Lead: Three-month LME lead continued to pull back from highs, closing the day lower at $1,813.5/tm after falling to a session low of $1,830/mt. Support from the 20-day moving average will be monitored.
The most-active SHFE contract declined for the fifth consecutive day as it ended lower at 14,720 yuan/mt. Near-term support is seen from the 40-day moving average.
Tin: Three-month LME tin retreated after climbed for twice last Friday, closing down 0.43% on the day at $17,265/mt, following a session low of $17,250/mt. Support below is expected from $17,150/mt.
The most-liquid SHFE September contract hovered in a broad band between the 10 and 20- day moving averages. It extended losses on the day, ending at 140,890 yuan/mt, down 310 yuan/mt. It will find support from 140,000 yuan/mt.