SMM Evening Comments (Aug 26): Shanghai Nonferrous Metals Closed Mixed amid Imminent Jackson Hole Speech

SHANGHAI, Aug 26 (SMM) – Shanghai nonferrous metals closed mixed as the investors stay keen to the imminent Jackson Hole speech to be delivered by Powell, who is expected to provide more clues on the pace and direction US rate hike.

Shanghai copper added 1.71%, aluminium lost 0.42%, lead fell 0.69%, zinc jumped 1.23%, tin declined 0.6%, and nickel rose 1.68%.

Copper: The most-traded SHFE 2210 copper closed up 1.71% or 1,070 yuan/mt at 63,690 yuan/mt, with open interest up 15,089 lots to 164,183 lots.

On the macro front: (1) U.S. initial jobless claims for the week of August 20 were announced at 243,000, compared with the previous value of 245,000 and the forecast of 253,000 (bearish ☆) (2) The annualised U.S. real GDP in the second quarter was revised to -0.6%, compared with the previous value of -0.9% and the forecast of -0.8%. (bearish ☆)

In the spot market, the market mainly traded sources with next-month invoice. Standard-quality copper was in premiums of 460-470 yuan/mt in morning trade, and the spread between good and standard-quality copper widened slightly to 20-30 yuan/mt. Transactions were relatively active in the first trading session, but weakened in the second session with the premiums of standard-quality copper with next-month invoices falling to 440-450 yuan/mt. The falling premiums were the result of the game between the buyer and seller, and the end of long-term orders also weighed on the circulation of goods.

Aluminium: The most-traded SHFE 2209 aluminium closed down 0.42% or 80 yuan/mt to 18,860 yuan/mt, with open interest down 30,000 lots to 95,282 lots.

The shorts reduced the positions today, but the futures contract failed to break through the overnight high though was on the upward track today. The contract did not post significant changes as the most-traded SHFE contract is about to shift to SHFE 2210, but the spot transactions were no satisfying, and the downstream players stayed cautious. SHFE aluminium is expected to drop to some extent in the near term.

Lead: The most-traded SHFE 2209 lead closed down 0.69% or 105 yuan/mt at 15,020 yuan/mt, with open interest down 9,725 lots to 22,873 lots.

SHFE lead once fell below 15,000 yuan/mt today amid expected rising supply. The traders quoted based on the market dynamics, and the discounts narrowed compared with yesterday. The downstream purchased on demand, and the transactions in the spot market were still thin with the performance of new monthly long-term orders.

Zinc: The most-traded SHFE 2210 zinc closed up 1.23% or 310 yuan/mt at 25,500 yuan/mt, with open interest up 13,079 lots to 131,165 lots.

In the spot market, SMM zinc ingot social inventory stood at 125,400 mt as of Friday August 26, down 600 mt from Monday and extending the low. Zinc prices were supported on the fundamentals. Today, overseas electricity bill soared, which will undoubtedly put great pressure on overseas smelting activities. LME zinc is expected to rush in an increase with expected support from falling supply. Market players shall watch if SHFE zinc will shadow the moves of LME zinc overnight.

Tin: The most-traded SHFE 2210 tin closed down 0.6% or 1,200 yuan/mt at 197,380 yuan/mt, with open interest down 632 lots to 33,053 lots.

In the spot market, the smelters were slightly less willing to quote in morning trade, while the quotes remained stable. The quotes from the traders were in a narrower price range, and the premiums of brand Yunxi dropped slightly. The market transactions thinned approaching the weekend, and the downstream players purchased on rigid demand. SHFE warrants inventory fell 59 mt to 2,134 mt, with a weekly fall of 362 mt. On the other hand, SHFE tin inventory recorded a combined drop of 395 mt last week to 2,431 mt.

Nickel: The most-traded SHFE 2210 nickel closed up 1.68% or 2,880 yuan/mt at 174,200 yuan/mt, with open interest down 1,766 lots to 56,462 lots.

On the supply side, premiums of domestic pure nickel stood firm because of the purchases on rigid demand, thus the pure nickel imports remained profitable. In terms of NPI, the terminal sentiment is still pessimistic at present. In addition, the previously purchased high-priced ore brought the NPI plants high smelting costs, hence the plants held their prices firm and the spot trading remained sluggish. On the demand side, at present, there is a shortage of some specifications of stainless steel in the spot market, but the impact on the prices was limited, and the spot transactions were still slack. As for the alloy, the entire sector could see purchases on rigid demand. The demand for pure nickel in the military sector was normal, but that in civil alloy remained sluggish. In general, the current slack demand offers limited support to the nickel prices.

[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.]