SMM News: over the weekend, the heads of state of China and the United States agreed to restart Sino-US economic and trade negotiations at the G20 meeting, and optimism flooded the domestic financial markets. On Monday, the Shanghai stock index jumped higher and opened up more than 2%, as the futures market black and chemical sectors staged a bullish spree. But the non-ferrous plate, which was supposed to be heavily affected by macro sentiment, quickly fell back after a general rally in the morning, with Shanghai copper closing up 0.74 per cent, failing to break last week's high after a 2 per cent drop in Shanghai nickel, where the centre of gravity had continued to shift upward. Today is the collective fall, the decline is heavy, can not help but make investors full of confusion, this time the warming of the trade pattern why do not command non-ferrous metals?
The market has long been looking forward to the outcome of the G20, and the deadline for further negotiations has not yet been set.
In May this year, Sino-US economic and trade relations suddenly turned evil, and the two sides began a new round of mutual tariffs, during which the market was more pessimistic about the trade pattern between the two countries, and the negotiations are expected to fall into a long stalemate. Downward pressure on the domestic economy also remains. As a macro barometer, Shanghai Copper plunged sharply in early May and then began a search for the bottom, with the main contract hitting 45830 yuan per ton on June 6, a nearly two-year low. But macro bearish after Price in, copper prices began to stop falling and stabilize.
Since the middle and late June, there has been a steady stream of good news from the market, frequent supply-side disturbances, the release of signals from the Federal Reserve to cut interest rates this year, the superposition of a phone call from the heads of state of China and the United States, and investors have begun to place their hopes on the upcoming G20 summit. market optimism has been given a big boost. Affected by the above factors, regardless of the strength of the fundamentals, non-ferrous metals show certain signs of rebound. Among them, copper and nickel rebounded most notably, rising by more than 2 per cent at one point in the range.
After the news of the resumption of Sino-US trade talks, as metal prices had already reflected the results in the early days, the overall rise of the non-ferrous plate fell back on Monday morning, while Shanghai nickel was constrained by a sharp increase in inventories of nearly 2 per cent. But then, according to foreign media, despite the resumption of negotiations, tariff levels were only frozen and the two sides did not set a deadline for further progress, and the optimism provided by the G20 summit on Tuesday on the non-ferrous sector was completely cooled.
Economic data is weak and downstream demand is in the off-season
The tail risk of imposing new tariffs in the short term has been eliminated, but the deterioration in economic data has made the market more concerned.
China's official and Caixin manufacturing PMI figures for June were both 49.4, both below the line of prosperity and decline, and downward pressure on the domestic economy only increased. In addition, Japan, Germany, France and Britain, the euro zone Markit manufacturing PMI data have been less than expected, the United States ISM manufacturing PMI also continued to decline. The global economic outlook remains under pressure, meaning the outlook for demand for non-ferrous metals, an important industrial raw material, is bleak.
In the first few months of this year, the metal downstream automotive industry is very depressed, real estate, infrastructure and so on have not improved significantly. In July, most metals will gradually enter the traditional consumption off-season, but zinc, nickel and other metal supply is expected to increase. From the inventory performance point of view, the recent fundamentals of good aluminum storage speed significantly slowed down, copper, zinc, lead and other inventories began to stabilize, showing the weakening of downstream demand, futures prices began to lack of upward momentum. The inventory of nickel and tin is increasing, among which the inventory of stainless steel in the downstream of nickel is running at a high level, and the downward pressure on the futures price is relatively heavier.
To sum up, the resumption of trade negotiations to the metal market to bring substantial benefits are limited, gradually into the off-season non-ferrous plate more attention to the consumer side of the situation.