SMM Morning Comments (Aug 31): Shanghai base metals were mostly higher as China’s manufacturing activity expanded in August

SHANGHAI, Aug 31 (SMM) — Shanghai base metals broadly rose on Monday morning as China’s manufacturing activity expanded in August.

The official manufacturing Purchasing Managers’ Index (PMI) for August came in at 51.0, according to the National Bureau of Statistics.

Shanghai base metals closed mixed on Friday night. Copper added 0.35%, aluminium advanced 0.48% and nickel strengthened 0.64%, while zinc fell 0.3%, lead weakened 0.32% and tin edged 0.09% lower.

Their counterparts on the LME, except for lead and tin, traded higher on Friday. Nickel rose 1.22% to lead the way up, copper increased 0.77%, aluminium inched up 0.12% and zinc firmed 0.78%, while lead slipped 0.38% and tin closed flat.

Copper: Three-month LME copper rose for the fifth consecutive day on Friday amid upbeat economic data, settling 0.77% firmer at $6,674/mt. The LME market is closed for a summer bank holiday and will resume normal trading on Tuesday September 1.

The most-active SHFE 2010 copper contract surged to a one-week high of 52,230 yuan/mt on Friday night, before paring some gains to close 0.35% higher at 51,900 yuan/mt. It is likely to trade between 51,700-52,100 yuan/mt today, while spot premiums are seen at 20-60 yuan/mt.

Aluminium: Three-month LME aluminium broke above $1,800/mt to a more than half-year high of $1,806/mt on Friday, before giving up some gains to end 0.12% higher at $1,798/mt. 

The most-liquid SHFE 2010 aluminium contract increased 0.48% to close at 14,620 yuan/mt on Friday night. It is expected to trade between 14,430-14,810 yuan/mt, while spot premiums are seen lower at 20-40 yuan/mt.  

Zinc: Three-month LME zinc rose 0.78% to end at $2,516/mt on Friday, after hitting its highest in 2020 of $2,558/mt earlier in the session. Zinc stocks across LME-listed warehouses shrank 2,500 mt or 1.12% to 219,950 mt. Weak US dollar, the Federal Reserve’s policy shift and a rise in US personal spending bolstered LME zinc.

The most-traded SHFE 2010 zinc contract touched an intraday high of 20,245 yuan/mt after the opening of the overnight trading, but later moved lower along with LME zinc to close 0.3% weaker at 19,850 yuan/mt on Friday night. Zinc supply increased as most of smelters recovered from maintenance, and a rally in treatment charges for domestic zinc concentrate further boosted profits. The October contract is likely to move between 19,700-20,200 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen stable at 90-100 yuan/mt.

Nickel: The most-active SHFE 2011 nickel contract closed 0.64% higher at 120,190 yuan/mt on Friday night.  

In terms of fundamentals, high scheduled production of #300 stainless steel in Q3 will ease oversupply of high-grade NPI. Although refined nickel consumption was weak, fewer imports of spot nickel kept domestic social inventories stable.

Lead: Three-month LME lead settled 0.38% lower at $1,974.5/mt on Friday.  

The most-active SHFE 2010 lead contract trended lower on Friday night, ending 0.32% weaker at 15,625 yuan/mt.

Tin: Three-month LME tin ended flat at $17,775/mt on Friday, with stocks across LME-listed warehouses expanding 50 mt to 5,265 mt. Pressure above will be seen from $17,900/mt today.  

The most-liquid SHFE 2011 tin contract rebounded from a session low of 143,180 yuan/mt to close 0.09% lower at 143,850 yuan/mt on Friday night. Support below will be seen from 143,000 yuan/mt today.