SMM Morning Comments (Jul 28): Base metals broadly rose; Shanghai tin soared 6%

SHANGHAI, Jul 28 (SMM) – Nonferrous metals on the LME and SHFE moved substantially higher across the board on Tuesday morning, as the US dollar remained weak.

SHFE tin was the best performer, soaring more than 6% to a 20-month peak of 154,400 yuan/mt.

Nonferrous metals on the LME climbed across the board on Monday, recovering from last Friday’s collapses caused by concerns over rising coronavirus cases globally and escalating tensions between the US and China.

Lead soared 2.5% to lead the gains, tin jumped 2.4%, nickel rose 1.2%, zinc climbed 1.1%, aluminium advanced 0.8% and copper gained 0.5%.

On the SHFE, nonferrous metals, except for copper, cruised higher in overnight trading. Tin surged 2.1%, lead climbed 1.7%, nickel advanced 0.5%, aluminium gained 0.4% and zinc edged up 0.2%.

The US dollar index, which measures the greenback against a basket of its peers, hovered around 22-month lows in the morning of Asian trading hours on Tuesday, while oil prices climbed higher.

Copper: Three-month LME copper recovered 0.47% to $6,430/mt on Monday. It is expected to trade between $6,430-6,490/mt today.

The most-active SHFE September contract slipped to a session-low of 51,280 yuan/mt in overnight trading, before recovering some ground to end 0.14% lower at 51,600. It is likely to move at 51,600-52,000 yuan/mt today. Spot premiums are seen stable at 30-80 yuan/mt.

Aluminium: Three-month LME aluminium rose 0.77% to end at a new more than four-month high of $1,710/mt on Monday in choppy trading. It is likely to move at $1,690-1,730/mt today.

The September contract has overtaken the August one as the most actively traded aluminium contract on the SHFE. It strengthened 0.42% to end at 14,270 yuan/mt in overnight trading. Low inventories and firm spot premiums will remain supportive of SHFE aluminium prices. The SHFE September contract is expected to trade at 14,100-14,500 yuan/mt today.

Zinc: Three-month LME zinc reversed an earlier slip to end 1.06% higher at $2,235/mt on Monday. The rally in prices came despite rising inventories. Data showed that zinc stocks across LME warehouses extended their gains on Monday, increasing 2.8%, or 4,325 mt to 158,825 mt. LME zinc is expected to trade between $2,200-2,250/mt today.

The most-active SHFE 2009 zinc contract recovered from earlier losses to close 0.17% firmer at 18,110 yuan/mt in overnight trading, as gains were capped by resistance from the upper Bollinger band. Expectations that consumption will be driven by a high season and the recovery from floods underpinned SHFE zinc prices. The September contract is expected to move between 18,000-18,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen slightly higher at 80-90 yuan/mt over the August contract.

Nickel: Three-month LME nickel hovered in a wide range on Monday, hitting a new six-month peak of $13,865/mt before ending 1.21% higher at 13,800. Whether it could shrug off pressure at 13,900 will come under scrutiny today.

The most-active SHFE October contract strengthened 0.51% to close at 109,960 yuan/mt in overnight trading. Whether it could convincingly break above the 110,000 mark will come under scrutiny today.

Lead: Three-month LME lead surged 2.49% to end at $1,855.5/mt on Monday, after hitting a nearly two-week high of 1,860 earlier in the session. Whether it could move out of its recent range will come under scrutiny in the short term.

The most-active SHFE September contract climbed to its highest in more than a week at 15,395 yuan/mt in overnight trading, before ending 1.72% higher at 15,350. Fundamentals for SHFE lead have turned positive as tight supply points to a substantial recovery in consumption.

Tin: Three-month LME tin jumped 2.44% to close at a one-year peak of $18,050/mt on Monday.

The October contract has overtaken the September one as the most liquid tin contract on the SHFE. It climbed to a 15-month high of 148,720 yuan/mt in overnight trading, before ending 2.14% higher at 147,860.