SMM Morning Comments (Aug 10): Shanghai base metals fell across the board on dollar bounce-back

SHANGHAI, Aug 10 (SMM) — Nonferrous metals on the SHFE all declined as of 10:10 Beijing time on stronger US dollar index.  

Shanghai base metals, except aluminium, closed lower on Friday night. Copper plunged 3.32%, zinc shed 0.26%, lead declined 0.94%, nickel fell 1.24% and tin weakened 0.52%, while aluminium edged just 0.07% higher.

Their counterparts on the LME pulled back across the board on Friday. Copper tumbled 3.84%, aluminium dropped 1.04%, zinc shed 0.79%, nickel declined 0.59%, lead dropped 1.92% and tin slipped 0.62%.

US dollar rebounded from two-year lows last Friday after data showed US nonfarm payrolls increased 1.763 million in July against a record rise of 4.791 million in June and on renewed US-China tensions.

Copper: Three-month LME copper plunged 3.84% to finish the day at $6,237/mt on Friday. It is expected to trade between $6,200-6,300/mt today.

The most-active SHFE 2009 copper contract slumped 3.32% to close at 49,720 yuan/mt on Friday night. Better-than-expected US non-farm payrolls sparked concerns about whether the US Federal Reserve would keep relax monetary policies in the future. Talks on a new round of stimulus package stalled, casting a shadow on future consumption, which also weighed on copper prices. The September contract is likely to trade between 49,500-50,200 yuan/mt today, while spot premiums are seen at 70-130 yuan/mt.

Aluminium: Three-month LME aluminium fell 1.04% to end at $1,759.5/mt on Friday as the dollar index strengthened. Open interest added 2,430 lots to 802,000 lots as longs added positions. The contract is likely to trade between $1,740-1,800/mt today.

The most-liquid SHFE 2009 aluminium contract edged just 0.07% higher at close at 14,500 yuan/mt on Friday night. It is expected to move between 14,450-14,900 yuan/mt today, while spot premiums are seen at 30-50 yuan/mt.

Zinc: Three-month LME zinc closed 0.79% weaker at $2,385/mt on Friday in choppy trading. Zinc stocks across LME warehouses surged 9,750 mt to 197,175 mt. Continuing global widespread of Covid-19 triggered concerns on economic recovery. Rebounded US dollar curbed LME zinc. It is likely to move between $2,360-2,410/mt today.

The most-traded SHFE 2009 zinc contract hit an intraday high of 19,655 yuan/mt before giving up the gains and closing 0.26% lower at 19,365 yuan/mt on Friday night. Zinc output will rise as improved profits encouraged smelters to produce, but domestic zinc social inventories fell continuously. Optimism over consumption will support SHFE zinc. The September contract is expected to move between 19,100-19,600 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen stable at 80-90 yuan/mt.

Nickel: The most-active SHFE 2010 nickel contract rose to a session high of 115,660 yuan/mt after opening of the overnight trading as US jobless claims and non-farm payrolls for July beat expectations, and closed 1.24% lower at 113,730 yuan/mt on Friday night. Whether July consumer price index (CPI) for China will rise as expected will come under scrutiny today.   

Lead: Three-month LME lead ended 1.92% lower at $1,916.5/mt on Friday on rebounded US dollar and weakened gold and silver prices.

The most-active SHFE 2009 lead contract closed 0.94% lower at 16,305 yuan/mt on Friday night, after hitting a session high of 16,565 yuan/mt.  

Tin: Three-month LME tin closed 0.62% weaker at $17,750/mt on Friday in choppy trading. Tin stocks across LME warehouses added 20 mt to 4,020 mt. Support below will be seen at $17,550/mt today.

The most-liquid SHFE 2010 tin contract declined 0.52% lower at 146,170 yuan/mt on Friday night after climbing to a session high of 147,360 yuan/mt. Support below is seen at around 144,500 yuan/mt today.