SHANGHAI, Aug 20 (SMM) – Shanghai nonferrous metals market mostly closed in the negative territory as the US monthly meeting minutes showed that Fed officers have agreed to discuss tapering QE within this year.

Shanghai copper edged down 0.47%, aluminium added 0.73%, lead fell 1.82%, zinc slid 0.27%, tin plunged 3.89%, and nickel lost 0.99%.

Copper: The most-traded SHFE 10 copper contract closed down 0.47% or 320 yuan/mt to 67050 yuan/mt, with open interest up 10700 lots to 129000 lots. Intraday 09-10 contracts spread remained in backwardation, which stood at 150-170 yuan/mt approaching end of the trading day.

On the macro front, the disclosed monthly meeting minutes showed that Fed officers have agreed to discuss tapering QE within this year in view of stabilised job market and economy recovery, which was basically on par with market expectations, later weighing on global stock markets and commodities at the same time, amid which US dollar index climbed to its new high since last November. US jobless claims of last week were the lowest since COVID-19 breakout, indicating a warming-up job market before autumn. On the other hand, the July PPI on a monthly basis in the euro zone diverged, showing that the overall manufacturing industry still possess the potential to repair itself.  

Meanwhile, China copper market was dominated by backwardation structure. Fundamentals were resilient amid the concurrence of support from spots, tightening copper scrap, high profitable imports and high trading premiums.

Tonight, the market shall pay attention to Canada retail sales growth rate in June month on month (expected at 4.5% and finalised at -2.1% in the previous session) to determine the uptrend rooms of copper market.

Aluminium: The most-traded SHFE 2110 aluminium closed up 0.73% or 145 yuan/mt to 20110 yuan/mt, and long open interest up 5635 lots to 232000 lots. SHFE aluminium continued to correct down on Wednesday and Thursday amid a sluggish macro front, and rallied today in light of strong fundamentals. The contract is expected to fall into the rangebound of 19700-20300 yuan/mt.

Lead: The most-traded SHFE lead continued to drop today following the broad non-ferrous metals market. Basic metals were pressured due to increasing geopolitical risks in Afghanistan and hawkish signals from the Fed. In spot market, SHFE lead inventories put an end to its uptrend in 8 weeks. Quotations from smelters fell following the board market, bringing up actual transactions.

Zinc: The most-traded SHFE zinc closed down 0.27% or 60 yuan/mt to 22440 yuan/mt, with open interest down 9265 lots to 51552 lots. On the fundamentals, social inventories of zinc ingots across seven major markets in China added by 6100 mt, a bigger increase than the previous session according to SMM. Zinc prices are likely to remain low amid weakening expectations for high season due to COVID-19 pandemic and eased power restrictions on the supply side.

Tin: The most-traded SHFE 2109 tin closed down 3.89% at 231990 yuan/mt, with open interest down 3558 lots. The daily chart experienced mild volatility today, indicating that market was still digesting the plummet in prices in the last trading day. While the greatly declined number of open lots showed that both long and short capitals chose to exit the market to stay away from market uncertainties amid blurred future trending.

On the fundamentals, the gradually resumed production across domestic plants and mines supported the expectations for eased supply. However, traders still reported limited goods available on the market, meaning that it will take some time before products arrive.

Generally speaking, the significantly falling zinc prices recently could be taken as a major correcting-down amid a long term uptrend, a time for risk sentiment to find a way out. It is still early to say that zinc prices have revised to bearish though fundamentals have signalled ease in supply.

Nickel: The most-traded SHFE 2109 nickel closed down 0.99% or 1400 yuan/mt at 140010 yuan/mt, with open interest down 315 lots to 94029 lots. Currently, market transactions were thin amid weakening stainless steel market sentiment and purchase on-demand by steel companies. Costs of iron companies rose due to high nickel prices. Demand for nickel sulphate from new energy sector remains. Nickel prices will remain resilient due to strength in the fundamentals. The market shall pay attention to influences from stainless steel and new energy sectors.