SMM Evening Comments (Jun 16): Shanghai nonferrous metals fell across the board as markets awaited Fed outcome

Published: Jun 16, 2021 18:00 (GMT+8)

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SHFE nonferrous metals broadly fell on Wednesday June 16 as investors looked ahead to the US Federal Reserve's interest rate decision.

SHANGHAI, Jun 16 (SMM) – SHFE nonferrous metals broadly fell on Wednesday June 16 as investors looked ahead to the US Federal Reserve's interest rate decision.

Nickel led the losses and slumped 3.78%, aluminium slipped 1.82%, copper eased 2.66%, zinc lost 0.84%, tin went down 0.97% and lead decreased 1.11%.

The ferrous complex also fell across the board. Hot-rolled coil went down 2.67%, iron ore shed 1.52%, and rebar fell 2.92%.

Copper: The most-traded SHFE 2107 copper contract finished the day 2.66% lower at 68,450 yuan/mt. Open interest fell 4,328 lots to 126,000 lots. The Federal Reserve will announce its monetary policy decision on Wednesday afternoon local time. According to Bloomberg's survey of economists, the Federal Reserve may predict the interest rate increase in 2023 in the quarterly "bitmap", but the suggestion of reducing the code to buy bonds may not be made until August or September. However, the retail sales fell more than expected in May, suggesting that consumer spending shifted to the service industry. PPI accelerated in that month, which further aggravated inflationary pressure, and the output value of manufacturing industry exceeded expectations, which is expected to continue to accelerate in the future. China's social consumption data in May and the new housing starts in the US in May will be monitored tonight.

Aluminium: The most-liquid SHFE 2107 aluminium contract finished the day 1.82% lower at 18,590 yuan/mt. Open interest fell 20,652 lots to 167,288 lots.

Zinc: The most-active SHFE 2107 zinc contract closed down 0.84% at 22,310 yuan/mt. Open interest rose 1,049 lots to 80,864 lots.

Nickel: The most-traded SHFE 2107 nickel contract ended the day 3.78% lower at 128,260 yuan/mt today. Open interest fell 8,581 lots to 108,186 lots.

Lead: The most-traded SHFE 2107 lead contract ended the day 1.11% lower at 15,160 yuan/mt. Open interest rose 595 lots to 53,991 lots. Social inventories of lead ingots continued to reach a new high, and the official news that China National Food and Strategic Reserves Administration will release copper, aluminium, zinc and other stocks also boosted the enthusiasm of the Shanghai Stock Exchange for short positions in nonferrous metals. The contract will test support from 15,100 yuan/mt tonight.

Tin: The most-liquid SHFE 2107 tin contract fell to a session low of 204,220 yuan/mt and finished the day 0.45% lower at 205,000 yuan/mt today. Open interest fell 2,026 lots to 21,216 lots. The State Council executive meeting was about making a good job in ensuring the supply and price stability of bulk commodities, which formed resistance to the rise of tin prices. In the afternoon, affected by the storage news of official announcement, the base metals collectively fell under pressure. On the other hand, tin smelters were not very motivated to ship, and spot shortage still supported tin prices. It is expected that tin prices will fluctuate in the near term and the impact of the Fed meeting on the tin price trend will be monitored. Pressure above will be seen from 210,000 yuan/mt today. Support below will be seen from 203,000 yuan/mt today.

Evening comments Copper Aluminium Zinc Nickel Lead Tin

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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