SMM Evening Comments (Jul 14): Shanghai nonferrous metals closed mixed after surging US CPI in June, Aluminium gained 1.72%

SHANGHAI, Jul 14 (SMM) – SHFE nonferrous metals closed mixed today, as US CPI hit a record high in three decades in June, which strongly drove up the market concern of the Fed’s tightening monetary policies.

Aluminium led the gains by 1.72%, nickel inched up 0.01%, and tin rose 0.12%, while copper fell 0.36%, and lead and zinc both lost 0.54%.

Ferrous complex all rose today. Iron ore gained 0.79%, rebar won 2.86%, HRC increased 2.6%.

Copper: The most traded SHFE 2108 copper contract finished the day 0.36% lower at 68,870 yuan/mt today, with open interest down 546 lots to 115,000 lots.

US CPI rose 5.4% on the year in June, hitting a record high in three decades, driving up the market expectations of Fed’s tightening stimulus policies. US dollar and debts rose simultaneously yesterday, weighing on copper prices. The market remains in the game of economic recovery and the expectation of Fed’s tighter monetary policies. US Fed chairman Powell’s statement on the H2 monetary policies tonight is worth attention, and whether US PPI will further suppress copper prices will be the focus tonight.

Aluminium: The most traded SHFE 2108 aluminium contract ended 1.72% higher at 19,510 yuan/mt today, with open interest up 7,307 lots to 221,591 lots.

Lead: The most liquid SHFE 2108 lead contract fell 0.54% to close at 15,650 yuan/mt today, with open interest up 3,243 lots to 66,024 lots. The market remained relatively bearish technically.

Although the bearish sentiment is strong in the market due to the sluggish trade, downstream users and traders are still actively looking for buying chances for the game against the peak season expectations. Smelter quotations stood high, and discounts further shrank near the settlement day. Social inventories are expected to gradually increase this week. Whether SHFE lead will stabilise at the 20-day moving average of 15,650 yuan/mt is the focus tonight.

Zinc: The most active SHFE 2108 zinc contract lost 0.54% to close at 21,980 yuan/mt today, with open interest down 3,865 lots to 84,536 lots.

LME zinc fluctuated after James Bullard’s statement of tightening the Fed stimulus policies yesterday. Surging US CPI intensified the market concern of Fed’s tightening monetary policies, and caused wide fluctuation in non-ferrous metals prices. Fed’s attitude is not clear, and the market turns more cautious. US Fed chairman Powell’s statement on the H2 monetary policies tonight will be the focus. The power consumption of companies in Yunnan has been adjusted by local governments amid the power rationing, and the curtailment end time is yet to be determined. The companies generally reduced production by 10-25%, resulting in the market concerns of supply stability. Zinc prices will remain volatile in the short term.

Nickel: The most active SHFE 2108 nickel contract gained 0.01% to end at 139,960 yuan/mt today, with open interest down 16,909 lots to 126,527 lots.

Tin: The most traded SHFE 2108 tin contract inched up 0.12% to end at 220,670 yuan/mt today, with open interest down 4,456 lots to 37,577 lots.

The slump in open interest indicates that investors are not optimistic over the rapid price increase. Whether the open interest will rebound tomorrow is worth attention. SHFE tin has been in the upward trend for a long period affected by the fundamental supply and demand, and the prices have fluctuated many times, which shows that the market is dominated by the bullish funds with the fundamental support. The prices are likely to continue to increase.