SMM Morning Comments (Aug 6): Shanghai base metals were broadly firmer, holding onto overnight gains

SHANGHAI, Aug 6 (SMM) — Nonferrous metals on the LME rose for the most part on Thursday morning. Shanghai base metals, except tin and aluminium, moved higher as of 9:35 Beijing time, holding onto overnight gains.

Gold prices have risen for four straight trading days, breaking above $2,000 for the first time on Tuesday and climbing further to above $2,050 on Wednesday. The US dollar weakened as the White House was in a stalemate with Democrats over a coronavirus relief deal. It completes with gold as a safe haven.

On the SHFE, nonferrous metals, except for aluminium, cruised higher in overnight trading. Copper added 0.27%, zinc jumped 1.48%, lead rose 1.45%, nickel surged 1.68% and tin edged up 0.1%, while aluminium sank 1.29%.

Their counterparts on the LME performed similarly. Copper advanced 0.56%, zinc surged 2.15%, lead jumped 1.81%, nickel soared 2.04% and tin rose 0.62%, while aluminium shed 0.42%.

Copper: Three-month LME copper firmed 0.56% to close at $6,486/mt in choppy trading on Wednesday. It is likely to trade between $6,470-6,520/mt today.

The most-active SHFE 2009 copper contract ended 0.27% higher at 51,550 yuan/mt in overnight trading. Weaker US dollar index led to the slight rise in copper prices. On the other hand, copper social inventories expanded for three weeks in a row as copper consumption entered a low season in August. The September contract is expected to move between 51,700-52,100 yuan/mt today, while spot premiums are seen at 40-100 yuan/mt.

Aluminium: Three-month LME aluminium shed 0.42% to end at $1,760.5/mt on Wednesday in choppy trading. Open interest added 10,443 lots to 797,000 lots as shorts added positions.

The most-liquid SHFE 2009 aluminium contract trended lower in overnight trading, closing 1.29% weaker at 14,530 yuan/mt. It is likely to trade between 14,500-14,850 yuan/mt today, while spot premiums are seen at 50-70 yuan/mt.

Zinc: Three-month LME zinc finished the day 2.15% higher at $2,378.5/mt on Wednesday after hitting an intraday high of $2,415/mt. Trade volume soared to 13,000 lots. Zinc stocks across LME warehouses shrank 75 mt or 0.04% to 187,575 mt. US talks on a coronavirus relief package will be monitored today. LME zinc is expected to move between $2,360-2,410/mt today.

The most-traded SHFE 2009 zinc rose 1.48% to end at 19,165 yuan/mt in overnight trading, on the backdrop of lax monetary policy and improved demand from galvanising and die-cast zinc alloy producers. The September contract is expected to trade between 19,000-19,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen at 90-100 yuan/mt.  

Nickel: The most-active SHFE 2010 nickel contract extended earlier gains after the opening bell and surged to a session high of 117,200 yuan/mt, but later it relinquished some gains and closed just 0.43% higher at 113,480 yuan/mt in overnight trading. News that the US may develop the coronavirus vaccine in 2020 may bolster market confidence.  

Lead: Three-month LME lead ended 1.81% firmer at $1,917/mt on Wednesday after hitting a session high of $1,936/mt.

The most-active SHFE 2009 lead contract climbed to a session high of 16,155 yuan/mt before paring some gains and closing 1.45% higher at 16,065 yuan/mt in overnight trading. The prospect of improved downstream consumption bolstered lead prices.

Tin: Three-month LME tin fluctuated vigorously on Wednesday. It increased 0.62% to end at $17,855/mt. Tin stocks across LME warehouses expanded 40 mt to 3,990 mt. Pressure above is seen at $18,000/mt today.

The most-liquid SHFE 2010 tin contract rose to a session high of 147,560 yuan/mt before slumping to around 146,300 yuan/mt, and closed 0.1% higher at 146,330 yuan/mt in overnight trading. Pressure above is seen at 148,000 yuan/mt today.