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SMM Evening Comments (Jul 23): Shanghai base metals dropped as investors eyed US-China tensions
Jul 23,2020 18:23CST
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Source:SMM
SHFE nonferrous metals, except for aluminium, ended lower across the board on Thursday July 23, amid investors growing worries about the renewed tensions between Washington and Beijing after the US ordered China to close its Houston consulate.

SHANGHAI, Jul 23 (SMM) – SHFE nonferrous metals, except for aluminium, ended lower across the board on Thursday July 23, amid investors growing worries about the renewed tensions between Washington and Beijing after the US ordered China to close its Houston consulate.


Lead was the worst performer with a drop of 1.43%. Copper shed 0.88%, zinc declined 0.25%, tin fell 1.02%, nickel slipped 1.21% while aluminium inched up 0.03%.


The ferrous complex closed mixed as iron ore eased 0.29%, stainless steel lost 0.96%, while rebar added 0.45%, hot-rolled coil rose 0.84% and coke advanced 2.23%.


An SMM survey showed that the operating rates of blast furnaces at Chinese steelmakers failed to extend a rebound from the prior week, as some mills carried out maintenance amid the impact of rainfall-induced floods.


Copper: The most-traded SHFE contract relinquished gains from the previous session as risk aversion grew as investors cautiously awaited new developments in the US-China conflict. The contract finished the day 0.88% lower at 51,970 yuan/mt. Open interest shrank 2,190 lots to 118,000 lots as longs covered their positions. With lingering support from the five- and 10- day moving averages, the contract may test and stay firm above 52,000 yuan/mt tonight. 


Aluminium: The most-traded SHFE August aluminium contract opened at 14,375 yuan/mt, climbed to a single-day high of 14,480 yuan/mt in first 20 minutes, and closed at 14,395 yuan/mt. Open interest of the August contract declined 3,645 lots to 109,583 lots, and that of SHFE aluminium index decreased 7,544 lots to 379,347 lots. Low inventories and tight spot supplies still support aluminium prices.
SMM data showed that primary aluminium ingot inventories in China continued to decline moderately this week. 


Zinc: The most-active SHFE September contract fell below the daily moving average to hit a session low of 17,795 yuan/mt, before it pared some losses to close at 18,065 yuan/mt, down 0.25% on the day. Bullish prospects for consumption from the infrastructure sector and continued decline in domestic zinc inventories may offer some support. This, together with uncertainty around US-China relations, will see the contract testing 18,000 yuan/mt tonight. 


Nickel: The most-traded SHFE October contract bounced back after declined to an intraday low of 104,640 yuan/mt, as investors covered their short positions amid a rally in LME nickel. The contract finished the day 1.21% lower at 106,040 yuan/mt. It remains to be seen whether the contract would continue to rebound tonight. 


Lead: The most-traded SHFE 2009 lead contract fluctuated rangebound, moving between the daily and 20-day moving averages in the morning and between 14,820-14,915 yuan/mt in the afternoon, and ended 0.87% lower at 14,850 yuan/mt. Open interest gained 929 lots to 22,654 lots, and trade volume rose 220 lots to 20,791 lots. SHFE lead fell for two consecutive trading days, and generally gained support from the 20-day moving average.  


Tin: The most-liquid SHFE contract ended down 1.02% on the day at 141,240 yuan/mt, following an intraday low of 140,450 yuan/mt. Support below is seen from the 20-day moving average, or 140,500 yuan/mt. 

 

 

Evening comments
Futures movement
Copper
Aluminium
Zinc
Nickel
Lead
Tin

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