SMM Evening Comments (Aug 18): Shanghai Nonferrous Metals Fell in the Negative Territory

SHANGHAI, Aug 18 (SMM) – Shanghai nonferrous metals market closed in the negative territory amid a darkening economic outlook.

Shanghai copper fell 1.53%, aluminium lost 0.79%, lead slid 0.52%, zinc lost 0.15%, tin edged down 0.05%, and nickel plummeted 2.42%.

Copper: The most-traded SHFE 09 copper contract closed down 1.53% or 1070 yuan/mt to 68720 yuan/mt, with open interest down 1423 lots to 113200 lots.

On the macro front, Fed Chairman Powell warned about the uncertainties in economic outlook against the repeated COVID-19 pandemic, and also said that Fed’s facilities had limitations. In the data front, US retail sales in July fell 1.1%, which was wider than expected, indicating consumers’ shift to the services sector. Inventors became even more worried about a slowing economic growth, depressing risk appetite. US dollar index surged in overnight trading to above 93, pushing down copper prices.

Tonight the market shall pay attention to US new housing starts in July on an annual basis (estimated to be 1.60 million and finalised at 1.643 million in previous period) that demonstrates the recovery of the real estate sector.

Lead: The most-traded SHFE 2109 lead closed down 0.52% or 80 yuan/mt to 15335 yuan/mt, with open interest up 492 lots to 82784 lots. Spot lead holders were reluctant to sell, while secondary lead discounts narrowed with insufficient shipment. Downstream sector was actively in making inquiries but actual transactions were rare. Tonight the market shall watch if lead prices could stabilise around 15300 yuan/mt and stop declining.  

Tin: The most-traded SHFE 2109 tin closed down 0.05% at 241850 yuan/mt, with open interest down 2548 lots. It could be reasonably inferred that the capital entering the market in the last trading day amid highs has left today, evidenced by the decreasing open interest of 2548 lots as an absolute number. Therefore, long capital lacks confidence in continuous rising in prices. However, the fall of most non-ferrous metals failed to attract short capitals, indicating their ambiguous attitudes. 240000 yuan/mt will become the market’s major expectation in the short term.

Nickel: The most-traded SHFE 2109 nickel closed down 2.42% or 3530 yuan/mt at 142310 yuan/mt, with open interest down 6661 lots to 105000 lots. Nickel prices trended down amid bearish non-ferrous metals caused by less-than-expected retail sales data in July and soring US dollar index, as well as weakening SS2109 contract and sluggish market sentiment.

Tonight the market shall pay attention to EIA oil inventories of the week ended August 13.