SMM Evening Comments (Jul 28): Shanghai Nonferrous Metals Closed with Gains amid Dovish Signals from the US Fed

SHANGHAI, Jul 28 (SMM) – Shanghai nonferrous metals all closed with gains as market sentiment eased after US Fed Chairman Powell delivered a dovish speech following the announced 75bps rate hike.

Shanghai copper rose 2.99%, aluminium advanced 4.03%, lead gained 0.72%, zinc added 3.83%, tin climbed 1.31%, and nickel jumped 0.6%.

Copper: The most-traded SHFE 2209 copper closed up 2.99% or 1,740 yuan/mt at 59,990 yuan/mt, with open interest up 2,611 lots to 155,978 lots.

On the macro front, the US Fed raised interest rates by 75 basis points for the second consecutive time in an attempt to control inflation. It noted that while the labour market remains strong, other economic indicators have weakened. The dollar index fell 0.69% on Wednesday, its worst performance in a week, to close at 106.48, with Fed Chairman Powell's dovish comments causing the market to expect a slower path of rate hikes.

In the spot market, spot premiums kept falling. Standard-quality copper was initially in premiums of 350 yuan/mt in morning trade, and then dropped to 330 yuan/mt as traders were in need of cash. Some sources were quoted with premiums of 300 yuan/mt around the noon time, but the demand failed to pick up. The spread between good and standard-quality copper remained at 10 yuan/mt, and the premiums of the former dropped to 350 yuan/mt to 320 yuan/mt.

Aluminium: The most-traded SHFE 2209 aluminium closed up 4.03% or 725 yuan/mt to 18,730 yuan/mt, with open interest down 735 lots to 177,560 lots.

In the spot market, the traders were active to sell as futures prices kept rising, while the buyers stood wait-and-see.

Lead: The most-traded SHFE 2209 lead closed up 0.72% or 110 yuan/mt at 15,305 yuan/mt, with open interest up 2,612 lots to 58,833 lots.

Cargo holders quoted based on the market dynamics, and the quotes were mostly in discounts amid slightly abundant sources in the market. The downstream was less interest in purchasing around month-end, and purchased on dips amid large discounts for secondary lead.

Zinc: The most-traded SHFE 2209 zinc closed up 3.83% or 870 yuan/mt at 23,610 yuan/mt, with open interest up 6,122 lots to 112,803 lots.

US dollar index dropped sharply after the US Fed monetary resolution was announced, indicating materialised effect of rate hike. The futures prices were also high today. However, the sluggish consumption will contain the momentum of the futures contract.

Tin: The most-traded SHFE 2209 tin closed up 1.31% or 2,530 yuan/mt at 195,230 yuan/mt, with open interest up 2,683 lots to 54,790 lots.

In the spot market, quotes offered by smelters raised along with rising futures prices, and some lowered the quotes. The quotes offered by the traders were flat in terms of quantity, while the spread between different brands narrowed. The downstream, on the other hand, purchased on rigid demand.

Nickel: The most-traded SHFE 2209 nickel closed up 0.6% or 1,000 yuan/mt at 169,060 yuan/mt, with open interest up 10,937 lots to 81,113 lots.

Premiums of Jinchuan and NORNICKEL nickel both dropped from the last trading day, as traders were eager to sell. And high production of overseas pure nickel also weighed on domestic pure nickel prices. In terms of nickel briquette, its cost efficiency was still meagre compared with intermediate products, hence there were barely any transactions. NPI prices dropped slightly, and the stainless steel sector remained poor, resulting in NPI oversupply.

[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.]