SMM Evening Comments (Jul 9): Shanghai nonferrous metals closed mixed, lead fell 0.79

SHANGHAI, Jul 9 (SMM) – SHFE nonferrous metals, except for copper and lead, all went up today, amid the shrinking increase in China’s CPI and PPI.

Nickel rose 2.61% to lead the gains, aluminium increased 0.32%, zinc went up 0.58%, and tin advanced 1.38%, while copper fell 0.14% and lead shed 0.79%.

Ferrous complex ended mixed today. Iron ore fell 3.73%, rebar rose 0.33%, and HRC gained 0.36%.

Copper: The most active SHFE 2108 copper contract closed 0.14% lower at 68,920 yuan/mt today, with open interest up 874 lots to 115,000 lots.

China’s June consumer price index (CPI) rose 1.1 points on the year, the increase narrowing 0.2 point from May, shrinking for the first time on a monthly basis after turning positive. The producer price index (PPI) rose 8.8 points on the year in June, and the increase narrowed 0.2 percentage points on the month, shrinking for the first time since January 2021. The initial jobless claims increased slightly last week, but still stood low. The consumer credit hit a record high in May, and the 30-year Mortgage Rates fell to the lowest level since February, affecting the market sentiments. However, the market direction is still unclear without much economic data. China’s M2 annual supply rate and US monthly wholesale rate for May will be the focus tonight.

Aluminium: The most liquid SHFE 2108 aluminium contract ended 0.32% higher at 18,875 yuan/mt today, with open interest down 3,987 lots to 197,832 lots.

Lead: The most traded SHFE 2108 lead contract dropped 0.79% to close at 15,725 yuan/mt today, with open interest up 7.62 lots to 60,464 lots.

Spot trade remained quiet today, holders gradually delivered goods to social warehouses, and social inventories increased as expected, up over 10,000 mt from last Friday. Downstream users were cautious and held a wait-and-see stance, and bearish sentiment existed. LME lead fluctuated at high levels recently, but lacked momentum for breakthrough under pressures, so the boost to SHFE lead is expected to be limited. Tonight’s focus will be the support from the 10-day moving average and 15,700 yuan/mt.

Zinc: The most active SHFE 2108 zinc contract increased 0.58% to end at 22,360 yuan/mt today, with open interest up 8,725 lots to 101,426 lots.

Nickel: The most traded SHFE 2108 nickel contract gained 2.61% to close at 139,880 yuan/mt today, with open interest up 41,526 lots to 156,710 lots.

Tin: The most traded SHFE 2108 tin contract gained 1.38% to close at 219,300 yuan/mt today, with open interest up 2,973 lots to 42,643 lots.

The August contract performed strongly recently. The funds entered the market and pushed prices up to between 219,550-220,000 yuan/mt. In the long term, the prices were in a steady upward trend, without sharp fluctuations. Therefore, the fundamental impact is more significant than the short term fund speculation on the prices, and the price trend will not be twist without the change in fundamentals. The short-term performance of SHFE tin under 220,000 yuan/mt is worth attention, and the long-term focus will be the change in the supply and demand balance.