SMM Morning Comments (Jul 6): Shanghai base metals were mostly lower as investors monitored data and OPEC+ clash

SHANGHAI, Jul 6 (SMM) — Shanghai base metals were mostly higher on Tuesday morning with investors digesting new data which showed euro zone business activity surging in June. Meanwhile, their counterparts on the LME traded mixed.

Shanghai base metals ended mostly lower in overnight trading. Zinc went up 0.27%, copper fell 0.19%, lead weakened 0.06%, aluminium dropped 0.7% and nickel slid 0.34%, while tin rose 0.2%.

The LME complex mostly advanced on Monday. Copper increased 1.45%, nickel rose 0.48%, tin went up 0.46% and zinc strengthened 0.56%, while aluminium fell 0.16% and lead weakened 0.65%.

Copper: Three-month LME copper rose 1.42% to end at $9,512.5/mt on Monday, and is likely to trade between $9,460-9,540/mt today.

The most-active SHFE 2108 copper contract went up 0.81% to close at 69,390 yuan/mt in overnight trading, and it is expected to move between 69,000-69,600 yuan/mt today, while spot premiums will be seen at 120–220 yuan/mt.

Due to the mixed employment data in the US last week, investors' worries about faster policy tightening were alleviated, and the copper futures rose as macro sentiment continued to ferment. On the other hand, China will enter the traditional low season of copper consumption, and the expectation of weaker consumption will gradually strengthen, which will limit the continuous rise of copper prices and enter the fluctuating adjustment range.

Zinc: Three-month LME zinc climbed up 0.55% and closed at $2,951.5/mt on Monday. Zinc stocks at LME-listed warehouses fell 775 mt to 252,300 mt. Overnight, the US dollar fell, giving basic support to nonferrous metals, as the details of last week's US employment report eased the market's concerns about the timing of the US interest rate hike. The minutes of the Federal Reserve meeting released on Wednesday should be monitored in the near term. The contract is likely to trade between $2,930-2,980/mt today.

The most-liquid SHFE 2108 zinc contract rose 0.32% to end at 22,140 yuan/mt in overnight trading. Yesterday was the first day of bidding for reserving, the market paid more attention to the rules of reserving. The spot market was tepid, and SMM social inventories increased, which weakened the support for zinc prices. The SHFE zinc contract is expected to move between 21,600-22,100 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 230-250 yuan/mt.

Lead: Three-month LME lead fell 0.5% to close at $2,285/mt on Monday. The contract will test support from $2,280 /mt.

The most-liquid SHFE 2108 lead contract fell 0.06% to settle at 15,810 yuan/mt on Monday night. There was no obvious change in the fundamentals of the weak lead market. After lead price rose, the spot trading was insufficient, and stocks continued to pile up. The contract will test support from the five day moving average and 15,800 yuan/mt today.

Tin: Three-month LME tin closed up 0.46% at $31,665/mt on Monday.

The most-liquid SHFE 2108 tin contract rose 0.2% to close at 216,110 yuan/mt on Monday night. Pressure above will be seen from 215,500 yuan/mt today. Support below will be seen from 217,660-220,000 yuan/mt today.