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SMM Morning Comments (Jul 24): Shanghai base metals mostly lower following overnight strong rebound
Jul 24,2020 10:07CST
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Source:SMM
SHFE nonferrous metals, except for nickel and tin, fell in early trade on Friday morning, as investors reacted to worsening US-China tensions and a sell-off in US markets overnight.

SHANGHAI, Jul 24 (SMM) – SHFE nonferrous metals, except for nickel and tin, fell in early trade on Friday morning, as investors reacted to worsening US-China tensions and a sell-off in US markets overnight.

 

The pullbacks came after strong rebounds overnight, as the US dollar was trading at its lowest against a basket of currencies since September 2018.

 

SHFE nonferrous metals rebounded across the board in overnight trading. Nickel surged 3.2%, zinc jumped 2.5%, copper climbed 1%, aluminium advanced 0.9%, tin and lead both crept up 0.8%.

 

Sharp gains in North American trading hours sent nonferrous metals on the LME to close broadly higher on Thursday. Nickel soared 4.6% to lead the gains, tin jumped 1.6%, zinc rose 1.5%, aluminium advanced 1.1%, lead rose 0.8% and copper was up 0.5%.

 

The US dollar index, which measures the greenback against a basket of its peers, touched a fresh two-year trough of 94.515 in the morning of Asian trading hours on Friday.

 

Oil prices, meanwhile, edged higher in choppy trading following pullbacks on Thursday.

 

Copper: Three-month LME copper strengthened 0.45% to $6,506/mt in choppy trading on Thursday. It is expected to trade between $6,450-6,500/mt today.

The most-active SHFE September contract hit a session-high of 52,470 yuan/mt in overnight trading, before closing 0.95% higher at 52,230 yuan/mt. It is likely to move at 52,200-54,900 yuan/mt today. Spot premiums are seen stable at 30-100 yuan/mt.

Firm fundamentals will continue to provide traction to copper prices amid market uncertainty.

 

Aluminium: Three-month LME aluminium gained 1.07% to $1,707.5/mt on Thursday, after hitting its highest since March 13 at $1,709/mt earlier in the session. It is likely to move at $1,680-1,720/mt today.

The most-active SHFE August contract rose to its highest in more than a week at 14,545 yuan/mt in overnight trading, before finishing the session 0.94% firmer at 14,500. Data released by SMM Thursday showed that primary aluminium ingot inventories in China continued to decline this week, which will remain supportive of SHFE aluminium prices. The SHFE August contract is expected to trade at 14,400-14,800 yuan/mt today.

 

Zinc: Three-month LME zinc strengthened 1.5% to end at $2,238/mt on Thursday, even as inventories extended their rebound. Data showed that zinc stocks across LME warehouses jumped 12.44%, or 16,600 mt on Thursday to 150,050 mt. LME zinc is expected to trade between $2,220-2,270/mt today.

Tracking gains in LME zinc, the most-active SHFE 2009 zinc contract advanced 2.52% to end at a session-high of 18,300 yuan/mt in overnight trading. The anticipation of consumption increase in a high season offered support to SHFE zinc. The September contract is expected to move between 18,000-18,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen at 60-70 yuan/mt over the August contract.

 

Nickel: Three-month LME nickel soared 4.63% to end at $13,685/mt on Thursday, after breaking above the five-60 day moving averages to its highest in almost two weeks at 13,705 earlier in the session. Whether it could shrug off pressure at 13,700 will come under scrutiny today.

The most-active SHFE October contract followed its LME counterpart higher to a one-week high of 108,780 yuan/mt in overnight trading, before ending up 3.2% at 108,670, as shorts trimmed their positions aggressively and longs loaded up.

 

Lead: Three-month LME lead climbed in North American trading hours on Thursday, after hovering in a tight range earlier in the session, and finished the day 0.8% higher at $1,828.5/mt.

The most-active SHFE September contract strengthened 0.77% to end at 14,980 yuan/mt in overnight trading, after breaking above the 15,000 mark earlier in the session.

 

Tin: Three-month LME tin reversed an earlier slip to end at an intraday high of $17,850/mt on Thursday, up 1.56% on the day. It now faces pressure at 18,000.

The most-liquid SHFE September contract gained 0.81% to close at 142,580 yuan/mt in overnight trading, due to the withdrawal of bears. Support is seen at the five-day moving average, while pressure is at 143,500.  

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