SMM Evening Comments (Jul 26): Shanghai Nonferrous Metals Closed All with Gains on Easing Market Sentiment

SHANGHAI, Jul 26 (SMM) – Shanghai nonferrous metals closed all with gains as the market sentiment eased due to better fixed asset investment in the first half of 2022, which rose 18.8% YoY, and as there was no further hawkish remarks from US Fed officials before the monetary meeting.

Shanghai copper rose 3.03%, aluminium advanced 0.19%, lead gained 0.43%, zinc added 1.44%, tin climbed 2.85%, and nickel jumped 5.58%.

Copper: The most-traded SHFE 2209 copper closed up 3.03% or 1,730 yuan/mt at 58,890 yuan/mt, with open interest up 17,630 lots to 152,178 lots.

U.S. Treasury officials said that even though data to be released this week show gross domestic product (GDP) fell for the second consecutive quarter, overall income and employment data suggest the U.S. economy is in good shape and not in recession.

In the spot market, the spot premiums dropped slightly, and market animation weakened slightly approaching the end of long0term orders. In morning trade, standard-quality copper was in premiums of 480-490 yuan/mt with few purchasing interest, and the premiums dropped subsequently to 450-470 yuan/mt. There was almost no spread between standard and good-quality copper at present. Market demand was sluggish amid high futures prices and high premiums.

Aluminium: The most-traded SHFE 2209 aluminium closed up 0.19% or 35 yuan/mt to 17,995 yuan/mt, with open interest up 6,981 lots to 174,204 lots.

In the spot market, aluminium prices ran under pressure, while the downstream was not active in picking up goods, and purchased mainly on dips amid seasonal low. It is expected that spot prices will maintain discounts in the near term.

Lead: The most-traded SHFE 2209 lead closed up 0.43% or 65 yuan/mt at 15,275 yuan/mt, with open interest up 1,019 lots to 57,922 lots.

Cargo holders were more willing to sell as SHFE lead moved rangebound, and gradually quoted with discounts. During this period, sources circulating in the market rose, and secondary lead was maintained with wide discounts of 300 yuan/mt, while the downstream purchased after negotiating further with the suppliers.

Zinc: The most-traded SHFE 2209 zinc closed up 1.44% or 325 yuan/mt at 22,895 yuan/mt, with open interest up 7,229 lots to 104,558 lots.

On the macro front, realised fixed asset investment (excluding real estate) in January-June rose 18.8% YoY. And market confidence was further eased by the Evergrande restructuring. In addition, the market has not yet heard any hawkish remarks from the US Federal Reserve, and market expectations tend to moderate, reducing the pressure on commodities. Although there is still no stronger support on the fundamentals, the futures market performed well led by the macro sentiment.

Tin: The most-traded SHFE 2208 tin closed up 2.85% or 5,510 yuan/mt at 198,560 yuan/mt, with open interest down 4,169 lots to 21,946 lots.

In the spot market, smelters were slightly less willing to quote in morning trade today, and some brands were already quoted flat. The offers from the traders changed little in terms of quantity, while the spot premiums dropped. However, the downstream turned away from high prices.

Nickel: The most-traded SHFE 2208 nickel closed up 5.58% or 9,560 yuan/mt at 180,960 yuan/mt, with open interest down 7,864 lots to 58,709 lots.

On the fundamentals, spot premiums of pure nickel kept falling, which boomed the purchasing sentiment. On the demand side, rigid demand still existed in the alloy sector despite surging nickel prices. Currently, producing nickel sulphate with nickel briquette had no cost efficiency, resulting in no transactions. Low inventory has underpinned nickel prices, but investors shall watch the impact of the macro sentiment.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]