SMM Morning Comments (Jul 21): Shanghai base metals steadied with investor sentiment supported by positive vaccine news

Published: Jul 21, 2020 09:46
In overnight trading, metals moved higher for the most part. Zinc crept up 1.1% in overnight trading, lead rose 0.9%, tin climbed 0.8%, copper advanced 0.6% while aluminium stayed flat. Nickel edged down 0.1%.

SHANGHAI, Jul 21 (SMM) – SHFE nonferrous metals were steady on Tuesday morning, holding onto overnight gains, as investor sentiment was supported by a slew of positive news on the coronavirus vaccine front.

 

In overnight trading, metals moved higher for the most part. Zinc crept up 1.1% in overnight trading, lead rose 0.9%, tin climbed 0.8%, copper advanced 0.6% while aluminium stayed flat. Nickel edged down 0.1%.

 

On the LME, nonferrous metals were also mostly higher, building on the previous session's bounce. On Monday, LME lead advanced 0.9% to lead the gains, zinc climbed 0.8%, tin and copper rose 0.6% and nickel gained 0.5%, while aluminium bucked the trend with a paltry 0.03% dip. 

 

The US dollar index, which measures the greenback against a basket of its peers, slipped to its weakest in more than four months at 95.605 in the morning of Asian trading hours on Tuesday, while oil prices climbed.

 

Copper: Three-month LME copper advanced 0.58% to $6,474.5/mt on Monday, after hitting an intraday high of 6,522.5 earlier in the session. It is expected to trade between $6,470-6,530/mt today.

The most-active SHFE September contract climbed to a session-high of 52,310 yuan/mt in overnight trading, before easing to end 0.55% higher at 51,650. It is likely to move at 51,800-52,200 yuan/mt today. Spot premiums are seen firm at 60-120 yuan/mt as traders need to fulfill their long-term contracts.

Supply concerns and capital inflows are likely to continue to provide traction to copper prices in the near term.

 

Aluminium: Three-month LME aluminium closed little changed at $1,662.5/mt on Monday in choppy trading. It is likely to move at $1,650-1,690/mt today.

The most-active SHFE August contract reversed earlier gains to end flat at 14,240 yuan/mt in overnight trading. Recovering demand, low social inventories and high spot premiums remain supportive to SHFE aluminium, with the August contract expected to trade at 14,000-14,400 yuan/mt today.

 

Zinc: Three-month LME zinc rallied after plummeting to its lowest in more than a week at $2,162/mt, and finished the day 0.78% higher at 2,198.5. Data showed that zinc stocks across LME warehouses continued their moderate decline on Monday, dipping 0.57%, or 700 mt to 121,700 mt. LME zinc is expected to trade between $2,170-2,220/mt today.

The most-traded SHFE September contract followed its LME counterpart higher to a session-high of 17,960 yuan/mt in overnight trading, before the entry of shorts forced it to give up some gains to end 1.08% higher at 17,815. The September contract is expected to move at 17,500-18,000 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen at 110-120 yuan/mt over the August contract.

 

Nickel: Three-month LME nickel boomeranged on Monday, climbing from a one-week low of $13,070/mt to an intraday high of 13,350 before relinquishing some gains to end 0.53% higher at 13,185. Whether it could shrug off resistance at the 10-day moving average will come under scrutiny.

The most-active SHFE October contract plunged after hitting a session-high of 106,720 yuan/mt in overnight trading, and closed 0.12% lower at 105,500. It still resides around the 20-day moving average, and is likely to hover at 105,000-107,000 today.

 

Lead: Three-month LME lead slipped to a two-week trough of $1,804/mt on Monday before rebounding to finish the day 0.85% firmer at 1,829. It is likely to remain rangebound in the short term.

The most-active SHFE September contract strengthened 0.85% to end at 14,885 yuan/mt in overnight trading. The onset of a high season is likely to push SHFE lead higher.

 

Tin: Three-month LME tin rose to a one-week high of $17,410/mt on Monday before erasing some gains to close 0.64% firmer at 17,375. Support is seen at the five-day moving average, while pressure is at 17,450.

The most-liquid SHFE September contract strengthened 0.78% to end at 141,690 yuan/mt in overnight trading, after hitting a session-high of 142,060 earlier in the session as longs piled into the market. It has shrug off a resistance confluence of the five- and 10-day moving averages, and now faces pressure at 143,000.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or to learn more information, please contact: lemonzhao@smm.cn
For more information on how to access our research reports, please contact:service.en@smm.cn
Related News
"Premier Li Qiang Leads State Council Meeting on Enhancing Effective Investment, Boosting Economic Growth"
10 hours ago
"Premier Li Qiang Leads State Council Meeting on Enhancing Effective Investment, Boosting Economic Growth"
Read More
"Premier Li Qiang Leads State Council Meeting on Enhancing Effective Investment, Boosting Economic Growth"
"Premier Li Qiang Leads State Council Meeting on Enhancing Effective Investment, Boosting Economic Growth"
Premier Li Qiang presided over an executive meeting of the State Council to study policy measures for promoting effective investment. The meeting noted that promoting effective investment plays an important role in stabilizing economic growth and strengthening momentum for development. It is necessary to innovate and improve policy measures, and intensify efforts to enhance the efficiency of utilizing funds such as central budget investments, ultra-long-term special treasury bonds, local government special bonds, and new-type policy-based financial instruments. In conjunction with formulating and implementing the 15th Five-Year Plan
10 hours ago
"Guided by Xi Jinping Thought, Implement 20th CPC Congress Spirit, Apply New Development Philosophy...
10 hours ago
"Guided by Xi Jinping Thought, Implement 20th CPC Congress Spirit, Apply New Development Philosophy...
Read More
"Guided by Xi Jinping Thought, Implement 20th CPC Congress Spirit, Apply New Development Philosophy...
"Guided by Xi Jinping Thought, Implement 20th CPC Congress Spirit, Apply New Development Philosophy...
Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will thoroughly implement the spirit of the 20th National Congress of the Communist Party of China and the plenary sessions of the Party’s 20th Central Committee, fully and faithfully apply the new development philosophy, strengthen top-level design, build computing power interconnection nodes oriented toward national hub periods, major strategic regions, and key industries, establish a system of computing power interconnection nodes, improve the efficiency and service level of public computing power resources, and promote high-quality development of computing power.
10 hours ago
Indirect Iran-US Nuclear Talks in Muscat Show Progress, Omani FM Mediates Tense but Efficient Discussions
10 hours ago
Indirect Iran-US Nuclear Talks in Muscat Show Progress, Omani FM Mediates Tense but Efficient Discussions
Read More
Indirect Iran-US Nuclear Talks in Muscat Show Progress, Omani FM Mediates Tense but Efficient Discussions
Indirect Iran-US Nuclear Talks in Muscat Show Progress, Omani FM Mediates Tense but Efficient Discussions
After intensive indirect consultations, the new round of nuclear talks between Iran and the US in Muscat, the capital of Oman, has achieved phased progress. It is reported that during this round of talks, the Iranian and US delegations did not meet directly. Instead, Omani Foreign Minister Badr acted as an intermediary, conveying a series of core proposals, strategic concerns, and policy positions to the other side. The atmosphere at the talks was tense yet efficient. According to preliminary on-site assessments, although both sides continue to negotiate over specific terms, they have reached a consensus on the key objective of "continuing dialogue."
10 hours ago