SHANGHAI, Aug 4 (SMM) – Shanghai base metals all glided down on Wednesday morning amid the sweeping Delta variant of COVID-19, and market sentiments turned negative. Their counterparts on LME basically went down.
LME metals all closed lower on Tuesday. Copper fell 0.59%, aluminium dropped 0.94%, lead decreased 0.25%, and zinc lost 0.21%.
SHFE metals performed the same in the overnight trading. Copper lose 0.51%, aluminium fell 0.5%, lead dropped 0.47%, zinc decreased 1.03%, and tin shed 0.2%.
Copper: Three-month LME copper dropped 0.59% on Tuesday to close at $9,560/mt, and is expected to trade between $9,520-9,610/mt today.
The most liquid SHFE 2109 copper contract fell 0.51% to settle at 70,900 yuan/mt last night, and is likely to trade between 69,000-70,500 yuan/mt today, with spot premiums between 220-350 yuan/mt.
The COVID-19 Delta variant is sweeping the globe. The average number of daily confirmed new cases in US has exceeded the peak of last summer. Many regions in China have seen the Delta infected cases. The pandemic dragged down the market risk appetite. Oil prices continued to fall sharply, with US oil fell to a two weeks low below $70. Copper futures kept dropping in the weak market.
Aluminium: Three-month LME aluminium edged down 0.94% to close at $2,588.5/mt on Tuesday, with open interest losing 12,000 lots to 670,000 lots.
The most-active SHFE 2109 aluminium contract decreased 0.50% to end at 19,740 yuan/mt last night, with open interest down 1,351 lots to 256,000 lots, and is expected to trade between 19,500-19,900 yuan/mt today.
SHFE commodities generally fell back, amid the negative sentiments in the short term. The spreading pandemic in China triggered the concerns about the extension of the off season. On the other hand, domestic social inventories was decreasing smoothly, which strongly supported the aluminium prices. The impact of the pandemic on bearish sentiments is worth attention.
Lead: Three-month LME lead closed 0.25% lower at $2,393/mt on Tuesday, and bulls left the market with profits. Lead stocks across LME listed warehouses hit a new low. The pressure line at $2,400/mt is the focus today.
The most-active SHFE 2109 lead contract shed 0.47% to close at 15,915 yuan/mt in the overnight trading yesterday. Bears reduced positions after recovering part of the losses in the previous day, but the price trend remained downward. The impact of the pandemic prevention and control as well as the blockade on market sentiments is worth attention. Today’s focus will be whether the prices can stabilise around 15900 yuan/mt.
Zinc: Three-month LME zinc shed 0.21% to end at $2,977/mt on Tuesday, with open interest down 434 lots to 252,000 mt. Zinc stocks across LME-listed warehouses dropped by 75mt to 24,450 mt. LME zinc is expected to fluctuate between $2,960-3,010/mt today.
The most-liquid SHFE 2109 zinc contract failed to break through 22,085 yuan/mt, and slid 1.03% to settle at 22,045 yuan/mt in the overnight trading, with open interest down 2,707 lots to 90,000 lots. The September contract is likely to move between 22,000-22,500 yuan/mt today, and spot price for domestic #0 Shuangyan zinc is expected to fall by 230 yuan/mt.
The spreading Delta variant intensified the global concerns about the economic recovery. Officials in Australia and New Zealand gave hawkish statements yesterday. Fed actions will be the focus in the short term. Zinc social inventories increased last week, and the impact of the off season consumption extended. The second batch of released zinc reserves will gradually be received by the buyers. Panic sentiments grew in the market due to the pandemic, and the power curtailment in Guangxi and Yunnan added disturbance in the zinc supply.
Tin: The most traded SHFE 2109 tin contract dipped 0.2% to end at 228,820 yuan/mt, with open interest down 527 lots. The prices briefly hit 226,380 yuan/mt before the rally.
Both long and short funds had little interest in the price trend around the support line, and the two parties did not increase their positions. Whether there will be new hot spot to trigger the capital game in the market is the focus today. SHFE tin is expected to move with the support at 227,500 yuan/mt, and the pressure from around 231,800 yuan/mt.