SMM Evening Comments (Jul 28): Shanghai base metals ended mixed as investors weighed stimulus hopes, COVID-19 crisis

SHANGHAI, Jul 28 (SMM) – SHFE nonferrous metals closed mixed on Tuesday July 28, following after a broad increase on Monday, as investors weighed rising coronavirus cases and prospects of more stimulus from major economies.

Tin remained the best performer with a rise of 2.36%. Lead advanced 2.29%, aluminium climbed 0.84%, while copper shed 0.29%, zinc fell 0.55% and nickel slipped 0.6%.

The ferrous complex extended their losses as iron ore closed 0.12% lower. Rebar dipped 0.75%, hot-rolled coil shed 0.5%, stainless steel edged down 0.04% and coke dropped 0.46%. 

SMM data showed that a total of 93 vessels carrying 15.22 million mt of iron ore arrived at eight major Chinese ports during July 19-25. That fell 1.67 million mt from the prior week but rose 810,000 mt from the previous year. 

Gold pared gains on Tuesday after a record increase as the dollar regained some ground after slumping to a two-year low. Investors now focus on the US Federal Reserve’s two-day meeting that ends Wednesday.

Copper: The most-traded SHFE contract failed to hold onto gains from the early session today, as it pulled back after surged to an intraday high of 52,250 yuan/mt, falling to the lowest level today at 51,360 yuan/mt and ending 0.29% lower on the day at 51,520 yuan/mt. Open interest increased 1,788 lots to 115,000 lots as investors added their short positions. Supply tightness of copper mine will underpin prices even as a possible strike was avoided at Antofagasta Minerals' Centinela copper mine in Chile. With lingering pressure from the five- and 10- day moving averages, the contract will likely test 52,000 yuan/mt tonight. 

Aluminium: The most-liquid SHFE September contract extended a rally from Monday, as longs continued to load up their positions, sending the contract to an intraday high of 14,400 yuan/mt this morning. The contract ended the day 0.84% higher at 14,330 yuan/mt, with open interest rising 8,623 lots to 108,345 lots. A weak US dollar and domestic low inventories of primary aluminium may keep the contract robust tonight. 

Zinc: The most-active SHFE September contract lost its upward momentum after climbed to a recent high of 18,525 yuan/mt. It relinquished all the gains today and closed the day 0.55% lower at 17,980 yuan/mt, following a session low of 17,930 yuan/mt. Expectations of a buildup in near-term supply will keep the contract rangebound tonight. 

Nickel: The most-traded SHFE October contract jumped to a fresh record high of the year, above 112,000 yuan/mt, driven by an increase in long positions after the contract opened at 110,100 yuan/mt. It then gave up gains as longs booked profits and exited, finishing the day 0.6% lower at 108,740 yuan/mt. Whether support from longs could keep the contract above 110,000 yuan/mt will be watched tonight. 

Lead: The most-active SHFE September contract rose for the third straight day as loaded-up longs lifted it to a session high of 15,560 yuan/mt, before the contract finished 2.29% higher on the day at 15,435 yuan/mt. It hovered firmly above the five-day moving average, with pressure above from 15,540 yuan/mt. Consumption has not shown a significant pickup as a traditional peak season is yet to come. It remains to be seen whether the strength in longs could continue to boost the contract tonight. 

Tin: The most-liquid SHFE October contract surged as much as 6.38% today, to a fresh high this year at 154,400 yuan/mt, exceeding the highest level in 2019. It pared some gains and closed the day at 148,170 yuan/mt, up 2.36% on the day. Pressure above is seen from 150,000 yuan/mt.