SMM Evening Comments (Jul 21): Shanghai base metals rose across the board amid vaccine hopes

SHANGHAI, Jul 21 (SMM) – SHFE nonferrous metals closed higher across the board on Tuesday July 21, reversing a broad decline on Monday, as investors sentiment was lifted by a slew of positive news regarding the coronavirus vaccine.

Expectations for stimulus packages in the US and Europe also bolstered market sentiment.

Lead was the best performer with a rise of over 2%. Cooper advanced 0.97%, aluminium edged up 0.04%, zinc climbed 1.16%, tin increased 0.62% and nickel went up 0.32%.

The ferrous complex also traded higher. Iron ore regained losses from the previous four sessions and jumped 2.75%. Rebar rose 1.21%, hot-rolled coil gained 1.07%, stainless steel grew 0.97% and coke edged up 0.77%.

SMM data showed that a total of 108 vessels carrying 16.89 million mt of iron ore arrived at eight major Chinese ports during July 12-18. That rebounded 1.45 million mt from the prior week and rose 5.36 million mt from the previous year. 

Copper: The most-traded SHFE September contract held onto most the of gains overnight as loaded-up longs lifted it to a session high of 52,040 yuan/mt before it closed up 0.97% on the day at 51,870 yuan/mt. Open interest grew 1,014 lots to 113,000 lots as investors added long positions. With support from the five- and 10- day moving averages and bullish signals from technical indicators, the contract may follow its LME counterpart and test the 52,000 yuan/mt level tonight. 

Aluminium: The most-traded SHFE August aluminium contract opened at 14,250 yuan/mt, climbed to a single-day high of 14,285 yuan/mt in the afternoon, and closed at 14,245 yuan/mt. Open interest of the August contract declined 3,034 lots to 117,163 lots, while that of SHFE aluminium index increased 586 lots to 399,008 lots. Low inventories and tight supply still support aluminium prices.

Zinc: The most-active SHFE September contract hovered around 17,820 yuan/mt and finished the day 1.22% higher at 17,840 yuan/mt. Open interest increased 2,445 lots to 80,982 lots. Optimistic prospects for consumption and little development on the mining front may see the contract extend a rangebound trend tonight. 

Nickel: The most-traded SHFE October contract found support from the 20-day moving average, as it recovered from a session low of 105440 yuan/mt and closed the day 0.32% higher at 105,970 yuan/mt. It will likely test pressure above from the five- and 10- day moving averages tonight. 

Lead: The most-active SHFE September contract opened at 14,915 yuan/mt, ending the day 2.03% higher at 15,075 yuan/mt. Open interest shrank 881 lots to 19,966 lots. Downstream consumption of lead has improved. Supply of secondary lead was tight amid thin profits, which drove consumption to refined lead. The contract may test support from 15,000 yuan/mt tonight, and movement of long positions will be monitored.

Tin: The most-liquid SHFE September contract climbed to an intraday high of 142,500 yuan/mt in the afternoon session, ending the day 0.62% higher at 141,460 yuan/mt. Strong support was seen from the 20-day moving average. Tonight, the contract may stabilise above the five-day moving average, with pressure expected from 142,500 yuan/mt.