SMM Evening Comments (Jul 27): Iron and Steel Closed Down over 1%

SHANGHAI, Jul 27 (SMM) – The nonferrous metals market closed the day with mixed performances.

Shanghai copper edged up 1.74%, aluminium was basically flat (-0.1%), zinc added 0.09%, nickel down 0.64% and tin decreased 0.61%.

Copper: The most-traded SHFE 09 copper contract closed up 1.74% or 1230 yuan/mt to 71770 yuan/mt, with open interest up 8651 lots to 137500 lots.

From the fundamentals, US new residual sales in June fell to its lowest since April, 2020 unexpectedly, indicating the real estate market kept cooling. US index trended lower. Officer Vlieghe from UK central bank said it was still early to tighten monetary policy, dovish stance continued. As a result, the broad dovish views rendered uptrend of Shanghai copper prices. Focus tonight will be July US Richmond Fed Manufacturing Index to predict the outlook of US manufacturing industry, a possible push-up of copper prices before the Fed holds meetings to discuss interest rates.

Aluminium: The most-traded SHFE 2109 aluminium closed down 0.05% or 10 yuan/mt to 19540 yuan/mt, with open interest down 7 lots to 287000 lots.

From the fundamentals, social electrolytic aluminium inventories continued de-stocking, down 27000 mt to 782000 mt from the previous month, supporting aluminium prices. In consideration of the recent unexpected production suspension of some electrolytic aluminium companies in Henan, short supply will continue. It is expected that aluminium prices will fluctuate at high in the short term.

Zinc: SHFE zinc closed up 0.09% or 20 yuan/mt to 22375 yuan/mt, with open interest up 16277 lots to 103796 lots. From the macro perspective, upstream mining and raw material manufactories industries both recorded significant growth in 1H, indicating profound development among mining and smelting, according to National Bureau of Statistics. From the fundamentals, monthly processing costs increased broadly according to SMM, from 4150 yuan/mt to 4250 yuan/mt for domestic processing and from 80 USD/mt to 87.5 USD/mt for import processing. On the other hand, re-stocking was not obvious this week, showing support to consumptions. Shanghai zinc prices are expected to keep fluctuating within range.

Lead: The most-traded SHFE 2109 lead closed down 0.99% or 160 yuan/mt to 16065 yuan/mt, with open interest up 944 lots to 75947 lots. Lead prices continued to rally today, and downstream market was dominated by rigid demand with light spot deliveries.

Tin: The most-traded SHFE 2109 tin closed down 0.61% at 231900 yuan/mt. Bull trend seems less firm after recent new high. Attention shall be paid to short capital entering market to break major support.

Nickel: The most-traded SHFE 2109 nickel closed down 0.64% or 930 yuan/mt at 144760 yuan/mt, with open interest up 7662 lots to 140853 lots. Market was positive about downstream stainless steel and new energy demand. Nickel prices may experience slight rally before stabilising as increase in export tariff has not been confirmed yet.