SHANGHAI, Jul 30 (SMM) – Shanghai base metals basically trended higher after opening on Thursday morning, as US dollar hit a month low overnight, and US economic data fell short of expectations. Meanwhile, their counterparts on LME generally went down.
LME metals were all driven up on Thursday. Copper gained 1.86%, aluminium rose 2.99%, lead increased 0.9%, and zinc went up 1.01%.
SHFE metals all cruised higher last night. Copper increased 0.42%, aluminium went up 1.92%, lead inched up 0.06%, zinc gained 0.76%, and tin advanced 0.86%.
Copper: Three-month LME copper advanced 1.86% on Thursday to close at $9,668/mt, and is expected to trade between $9,750-9,840/mt today.
The most-traded SHFE 2108 copper contract edged up 0.42% last night to close at 71,910 yuan/mt, and is expected to trade between 71,600-72,200 yuan/mt today, with spot premiums between 240-360 yuan.
Last week’s US initial jobless claims were slightly lower than expected, and the annual growth rate of GDP in Q2 was far below market expectations. At the same time, the growth rate in Q1 was slightly revised down. These data indicated that US still has a way to go to the economic recovery. US dollar fell below 92 points to hit a month low due to Fed’s dovish statement. There is still recovery room for the contradiction between supply and demand on the fundamentals, and copper prices are expected to remain high and volatile. Traders still hold prices high on the last trading day in July, and spot premiums are likely to stabilise against the volatile futures.
Aluminium: Three-month LME aluminium closed 2.99% higher at $2,596.5/mt on Thursday, with open interest increasing 1,850 lots to 670,000 lots, and is expected to trade between $2,550-2,600/mt today.
The most-active SHFE 2109 aluminium contract increased 1.92% to end at 19,945 yuan/mt last night, with open interest up 14,644 lots to 275,000 lots, and is expected to trade between 19,500-19,900 yuan/mt today.
Weakened US dollar gave strong support to LME aluminium. Aluminium plants in Yunnan, Guizhou and Guangxi will reduce production amid stricter power curtailment, which has also caused market concerns about the smooth launch of new capacities in the southwest regions. Aluminium prices are expected to fluctuate at high levels amid the falling inventories in the off-peak season. Attention needs to be paid to the impact of fundamentals and macroeconomic on the bulls’ sentiments.
Lead: Three-month LME lead climbed 0.9% higher to close at at $2,366/mt on Thursday. US dollar kept falling for the fifth consecutive days, driving LME lead to further rebound. Whether LME lead can continue upward to test $2,340/mt will be monitored today.
The most-liquid SHFE 2109 lead contract inched up 0.06% to end at 15,980 yuan/mt in overnight trading yesterday. Bulls slightly increased positions. Whether SHFE lead will keep rebounding back to 16,000 yuan/mt is worth attention today.
Zinc: Three-month LME zinc gained 1.01% to settle at $2,998/mt on Thursday, with open interest decreasing 550 lots to 249,000 lots. Zinc stocks across LME-listed warehouses dropped by 175 mt or 0.07% to 246,775 mt. Fed hinted that there’s still a way to go before tightening the monetary policies, which boosted the bullish sentiments in the market. However, the lower-than-expected US initial jobless claims suppressed the moods. LME zinc is expected to fluctuate between $2,960-3,010/mt today.
The most-liquid SHFE 2109 zinc contract advanced 0.76% to settle at 22,455 yuan/mt in the overnight trading, with open interest up 3,988 lots to 103,000 lots. The bidding of the second batch of national zinc reserves saw high market participation and good transactions. The low inventories and high spot premiums will support zinc prices. The changes in social inventories against growing supply are worth attention. The September contract is expected to move between 22,200-22,700 yuan/mt today, and spot premiums for domestic 0# Shuangyan zinc will be seen at 150-170 yuan/mt against the August contract.
Tin: The most traded SHFE 2109 tin contract rose 0.86% to end at 232,720 yuan/mt last night.
The overall fluctuation range was at the middle of the recent high levels, with direction blurred. The increase in the open interest was small overnight, indicating that the funds were less willing to enter the market. SHFE tin is expected to trade with the support at 230,000 yuan/mt and the pressure from around 235,000 yuan/mt.