SMM Morning Comments (Aug 3): Shanghai base metals mostly lower on Monday morning

SHANGHAI, Aug 3 (SMM) —Shanghai base metals mostly lower on Monday morning. US dollar plunged last week, while gold prices climbed above $1,900 per ounce. 

Nonferrous metals prices on the LME were mixed on Friday July 31. Copper declined 1.23%, aluminium fell 0.84%, nickel shed 0.33% and lead weakened 0.33%, while zinc jumped 0.87% and tin rose 0.53%.

On the SHFE, nonferrous metals, except for zinc and lead moved lower on Friday night. Copper fell 1.05%, aluminium declined 0.61%, nickel shed 0.31% and tin weakened 1.4%, while zinc surged 1.14% and lead increased 0.96%.

US dollar headed for the biggest monthly drop in a decade as virus fueled US economy fears. The US dollar index slid as low as 92.54 in early trading on July 31, a level last seen in May 2018, before rebounding to close at 93.45.

Oil gains nearly 1%, posted third straight month of gains, benefiting from news that US oil output cuts in May were the largest on record

Gold prices rose on July 31 to hit a new all-time high, as a sliding dollar and dire economic numbers from far and wide sparked a rush to safety in bullion. It was gold’s best month since February 2016, and its fifth straight positive month.

Copper: Three-month LME copper closed 1.23% weaker at $6,376/mt on Friday. It is expected to trade between $6,300-6,360/mt today.

The most-liquid SHFE 2009 copper contract ended 1.05% lower at 51,100 yuan/mt on Friday night. It is likely to move between 50,700-51,100 yuan/mt today. Spot premiums are seen strong at 50-100 yuan/mt as funds are ample in markets on the first trading day of August.

Aluminium: Three-month LME aluminium closed 0.84% weaker at $1,710/mt on Friday in choppy trading.

The most-traded SHFE 2009 aluminium contract extended earlier losses to end 0.61% lower at 14,590 yuan/mt on Friday night. It is expected to move between 14,450-14,800 yuan/mt today, with spot premiums seen at 40-60 yuan/mt over the September contract. 

Zinc: Three-month LME zinc closed 0.87% higher at $2,313/mt on Friday. Zinc stocks across LME warehouses shrank 125 mt or 0.07% to 188,050 mt, ending its six-day increase. Ample liquidity in global markets and the US $1.3 trillion stimulus package will bolster LME zinc, while rising new cases of COVID-19 overseas will curb LME zinc. The contract is likely to move between $2,290-2,340/mt today.   

The most-active SHFE 2009 zinc contract finished the day 1.14% higher at 19,005 yuan/mt in choppy trading on Friday night. It rose for four straight trading days last week as galvanising orders rose slightly on the backdrop of robust infrastructure construction. In addition, export orders of die-cast zinc alloy have gradually recovered. The September contract is expected to trade between 18,600-19,100 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen stable at 80-90 yuan/mt over the August contract.    

Nickel: Three-month LME nickel closed 0.33% lower at $13,740/mt on Friday on choppy trading. It opened at $13,775/mt on Monday morning, and the support from the 10-day moving average will come under scrutiny today.  

The most-liquid SHFE 2010 nickel contract was on a downward trend on Friday night, ending 0.31% weaker at 108,840 yuan/mt. Whether the contract will return to above 110,000 yuan/mt will be monitored today.  

Lead: Three-month LME lead climbed to an intraday high of $1,882/mt as the US House of Representatives passed a $1.3 trillion stimulus package, before closing 0.29% lower at $1,864/mt on July 31.  

The most-traded SHFE 2009 lead contract climbed to a one-week high of 15,880 yuan/mt as investors added long positions amid favorable macroeconomic environments, before easing some gains and ending 0.96% higher at 15,765 yuan/mt on Friday night.

Tin: Three-month LME 2010 tin contract closed 0.53% higher at $17,875/mt on Friday, after climbing to an intraday high of $18,000/mt. Tin stocks across LME warehouses shrank 120 mt to 3,895 mt. Support below will be seen at around $17,768/mt today.

The most-active SHFE 2010 tin contract declined 1.4% to finish at 145,170 yuan/mt on Friday night. SHFE tin stocks fell 352 mt to 3,283 mt. Support below will be seen at 143,100 yuan/mt today.