SMM Morning Comments (Aug 5): Shanghai base metals prices were mixed on Wednesday morning

SHANGHAI, Aug 5 (SMM) —Shanghai base metals prices were mixed as of 9:55 Beijing time.

The American Petroleum Institute (API) reported Wednesday morning that US crude supplies slashed by 8.59 million barrels to 520 million barrels for the week ended July 31.

API reported a decrease of 6.829 million barrels of crude oil inventories for the previous week ending July 24 while the U.S. Energy Information Administration reported a fall of 10.6 million barrels.

In the next few months, the Federal Reserve will be solidifying a policy outline that would commit it to low rates for years as it pursues an agenda of higher inflation and a return to the full employment picture that vanished as the coronavirus pandemic hit.

Nonferrous metals on the SHFE closed mixed in overnight trading. Copper shed 0.29%, zinc fell 0.32% and tin weakened 0.44%, while aluminium edged up 0.1% and nickel rose 0.67%. Lead ended flat.

On the LME, nonferrous metals, except for copper and tin, cruised higher on Tuesday. Aluminium jumped 1.35%, zinc added 0.8%, lead advanced 0.75% and nickel inched up 0.18%. Meanwhile, copper declined 0.43% and tin shed 0.59%.

Copper: Three-month LME copper slipped to a session low of $6,409/mt, before recouping some losses to finish the day 0.43% lower at $6,450/mt. It is likely to trade between $6,430-6,480/mt today.   

The most-active SHFE 2009 copper contract ended 0.29% lower at 51,540 yuan/mt in overnight trading. Domestic copper consumption is likely to weaken in August, with orders at smelters shrinking. Besides, smelters completed routine maintenance in July, and overseas raw materials supply improved. It is expected to move between 51,300-51,700 yuan/mt today, and spot premiums are seen at 40-120 yuan/mt.

Aluminium: Three-month LME aluminium finished the day 1.35% firmer at $1,768/mt on weaker US dollar index.  

The most-liquid SHFE 2009 aluminium contract fluctuated between 14,700-14,820 yuan/mt in overnight trading, before closing 0.1% firmer at 14,740 yuan/mt as investors added long positions. The contract is expected to trade between 14,650-14,900 yuan/mt today, and spot premiums are seen at 10-30 yuan/mt.

Zinc: Three-month LME zinc increased for three straight days as funds flowed into markets amid weaker US dollar index and rising crude oil prices. The contract closed 0.8% higher at $2,328.5/mt on Tuesday after rising to an intraday high of $2,340/mt. Zinc stocks across LME warehouse extended declines, shrinking 325 mt or 0.17% to 187,650, LME zinc is expected to move between $2,290-2,340/mt today.

The most-traded SHFE 2009 zinc contract broke through the 19,000 yuan/mt mark and soared to a session high of 19,070 yuan/mt, before giving up all gains and ending 0.32% lower at 18,815 yuan/mt in overnight trading. It is expected to move between 18,500-19,000 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen at 70-80 yuan/mt.

Nickel: The most-active SHFE 2010 nickel contract rose to a session high of 112,000 yuan/mt as US dollar index plunged while crude oil prices increased, and closed 0.67% firmer at 111,570 yuan/mt in overnight trading. Whether the contract would drop from highs will be monitored today.

Lead: Three-month LME lead closed 0.75% higher at $1,883/mt on Tuesday after climbing to an intraday high of $1,888/mt. It is likely to fluctuate at high levels in the short term.

The most-active SHFE 2009 lead contract fell to a session-low of 15,660 yuan/mt after the opening bell, before regaining the ground and ending flat at 15,815 yuan/mt in overnight trading. Whether US dollar would rebound and weigh on lead prices will come under scrutiny today.  

Tin: Three-month LME tin closed 0.59% weaker at 17,745/mt on Tuesday. Tin stocks across LME warehouses added 20 mt to 4,015 mt. Support below is seen at $17,560/mt today.

The most-liquid SHFE 2010 tin contract fell 0.44% to end at 146,080 yuan/mt in overnight trading, after climbing to an intraday high of 147,250 yuan/mt. It is expected to move between 145,000-147,500 yuan/mt today.