SMM Evening Comments (Jul 20): Shanghai base metals closed mostly lower as China kept benchmark lending rate unchanged

SHANGHAI, Jul 20 (SMM) – SHFE nonferrous metals, except for aluminium, closed lower on Monday, as investors remained cautious after China kept its benchmark lending rate steady for the third straight month.

China on Monday kept its one-year and five-year loan prime rate unchanged at 3.85% and 4.65%, respectively, matching market expectations, as the world’s second-largest economy is recovering from the shock coronavirus pandemic.

Record-breaking new coronavirus cases and rising tensions between Washington and Beijing also kept investors on edge.

On the SHFE, nickel dropped 1.1% to lead the losses, zinc fell close to 1%, lead and tin shed 0.8% and copper dipped 0.2%, while aluminium advanced 1%.

The nonferrous complex on the LME traded mixed as of 18:28 Beijing time, with copper, aluminium and zinc in positive territory while nickel, tin and lead in negative territory.  

Copper: The most-traded SHFE September contract weakened 0.23% to 51,270 yuan/mt on Monday in chopping trading. Whether it could remain above the 10-day moving average will come under scrutiny.

Aluminium: The most-liquid SHFE August contract hovered in a tight range, holding onto much of gains from Friday night to end up 1.03% at 14,245 yuan/mt. It remains below the five-day moving average. Low stockpiles under warrants and tight spot availability are expected to continue to provide traction to SHFE aluminium.

Zinc: The load-up of long positions lifted the most-active SHFE September contract during the daytime session, helping it clawing back some losses from Friday night to close down 0.95% at 17,655 yuan/mt. Strength at 17,500 was strong. SMM data showed that social inventories of zinc ingots in China extended their decline over the weekend, which is positive to prices.  

Nickel: The most-traded SHFE October contract fell to a two-week trough of 104,320 yuan/mt, before recovering some ground to finish the day 1.13% lower at 105,610 yuan/mt.

Lead: The September contract became the most actively traded lead contract on the SHFE. It slipped to its lowest in more than a week at 14,685 yuan/mt, before recouping some losses to end down 0.81% at 14,775 yuan/mt. SMM data showed that social inventories of lead ingots in China rose sharply last week, pointing to weak fundamentals. Whether it could remain above the 20-day moving average will come under scrutiny tonight.

Tin: The most-liquid SHFE September contract slipped to an intraday low of 139,690 yuan/mt, before ending down 0.79% at 140,280 yuan/mt. It is expected to continue to test support at the 20-day moving average in the short term.