SMM Evening Comments (Aug 23): Shanghai Nonferrous Metals Closed Mostly with Gains as PBoC Highlighting Financial Support to Real Economy

SHANGHAI, Aug 23 (SMM) – Shanghai nonferrous metals closed with gains as the People’s Bank of China called major financial institutions, especially large state-owned banks, to give full play to their role as an industrial leader, and maintain the stability of total loan growth as it is key to increase lending to the real economy.

Shanghai copper rose 0.25%, aluminium advanced 0.78%, lead added 0.17%, zinc jumped 1.77%, tin fell 0.72%, and nickel climbed 0.65%.

Copper: The most-traded SHFE 2209 copper closed up 0.25% or 160 yuan/mt at 63,040 yuan/mt, with open interest down 9,645 lots to 134,350 lots.

On the macro front, the US Chicago Fed National Activity Index in July posted a value of 0.27, up 0.52 from the previous value of -0.25. China's central bank called major financial institutions, especially large state-owned banks, to give full play to their role as an industrial leader, and maintain the stability of total loan growth as it is key to increase lending to the real economy. Meanwhile, reasonable financing needs for real estate should be guaranteed.

In the spot market, the buyers and sellers were still wrestling with each other. Standard-quality copper was in premiums of 570-580 yuan/m in morning trade, and good-quality copper in premiums of 600-620 yuan/mt, which led to fall to 580-600 yuan/mt. The downstream demand was still limited, with low acceptance of high premiums. The transactions were mainly made between traders, while the overall market animation decreased.

Aluminium: The most-traded SHFE 2209 aluminium closed up 0.78% or 145 yuan/mt to 18,685 yuan/mt, with open interest down 2,629 lots to 129,135 lots.

The long positions rose today. News came that the aluminium smelter Sunndal, affiliated to Hydro, goes on a strike, which quickly pushed up the contract to a high of 18,750 yuan/mt.

Lead: The most-traded SHFE 2209 lead closed up 0.17% or 25 yuan/mt at 15,065 yuan/mt, with open interest down 1,761 lots to 37,888 lots.

Power rationing was still in place, with the supply side suffering more, hence lead prices rose. The traders quoted according to market dynamics, and the premiums fell slightly. The downstream still purchased on demand.

Zinc: The most-traded SHFE 2209 zinc closed up 1.77% or 440 yuan/mt at 25,365 yuan/mt, with open interest down 4,208 lots to 97,675 lots.

Refined zinc supply has been deeply affected by the power rationing in south China maid extremely hot weather. In the spot market, premiums in Tianjin kept rising with delayed arrivals, attracting sources from Ningbo and Guangdong. Though the supply remained poor, zinc prices gained strong support from tight supply.

Tin: The most-traded SHFE 2210 tin closed down 0.72% or 1,440 yuan/mt at 199,110 yuan/mt, with open interest up 4,035 lots to 30,623 lots.

In the spot market, the quotes from the smelters were stable, and the spread between different smelters was narrow. The number of quotes from non-deliverable brands from the traders was still low, while the premiums remained flat from yesterday. The transactions in the spot market were limited as the futures prices moved in a narrow range.

Nickel: The most-traded SHFE 2209 nickel closed up 0.65% or 1,140 yuan/mt at 177,270 yuan/mt, with open interest down 12,843 lots to 52,250 lots.

Nickel prices were relatively flat today after surging a day ago as Indonesian president once again mentioned nickel product export ban in an interview last Friday. On the fundamentals, the supply was relatively tight, with import profits narrowing. On the demand side, though the new energy sector was robust, stainless steel mills were still with low operating rates due to the power rationing and losses.

[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.]