SHANGHAI, Aug 24 (SMM) – Shanghai nonferrous metals market closed in the positive territory amid favourable factors from the fundamentals.
Shanghai copper gained 1.45%, aluminium edged up 0.20%, lead added 0.78%, zinc advanced 0.45%, tin climbed 1.87%, and nickel jumped 1.24%.
Copper: The most-traded SHFE 10 copper contract closed up 1.45% or 980 yuan/mt to 68560 yuan/mt, with open interest down 3779 lots to 125400 lots.
On the macro front, U.S. Food and Drug Administration’s full approval of Pfizer and BioNTech’s Covid-19 vaccine has eased the market’s worries over economy recovery. Overnight data showed that US Markit manufacturing and services PMI for August was both sluggish, with the slowest growth rate in eight months, lowering market expectations for an accelerated tapering monetary policy. US dollar index fell after recording largest weekly gains in two months, lifting non-ferrous metals to the positive territory.
Tonight, the market shall watch the new housing starts in July on an annual basis (estimated at 700000 and finalised at 676000 in the previous session). A potentially cooling down real estate market will pressure on copper market.
Aluminium: The most-traded SHFE 2110 aluminium closed up 0.20% or 40 yuan/mt to 20425 yuan/mt, with open interest up 15614 lots to 295000 lots. On the fundamentals, the previously delayed shipment of aluminium ingots started to arrive, and domestic social inventory will extend its mild re-stocking in the short term. On the macro front, many officials present at the Fed meeting believed that inflation has reached target according to July Fed meeting minutes, which pushed up the US dollar index to nine-month high, pressuring on commodity prices. While on the hand, the National Development and Reform Commission signalled tightening control over aluminium production last week, supporting aluminium prices on the back of low social inventories and slow production resumption from power curtailment. Tonight the SHFE aluminium is expected to move between 20200 – 20500 yuan/mt.
Lead: The most-traded SHFE 2109 lead closed up 0.78% or 120 yuan/mt to 15460 yuan/mt, with open interest down 6515 lots to 49524 lots. In spot market, rising lead prices slightly depressed consumption. In primary lead, smelters' quotes at premiums fell mildly, and business activities were focused on delivery under long-term orders and execution of new orders. Transactions in spot market were light. Secondary lead was quoted at discounts with little change amid bullish outlook held by secondary lead smelters and rising battery scrap prices. Supply of primary and secondary lead is likely to increase as influences of power restriction draw to an end.
Zinc: The most-traded SHFE 2110 zinc closed up 0.45% at 22330 yuan/mt, with open interest up 5231 lots. In spot market, inventories in two major markets in China added with processing charges rebounding slightly from low. Cargo holders were active in selling, while downstream inquiries were relatively cautious.
Tin: The most-traded SHFE 2109 tin closed up 1.87% at 236800 yuan/mt, with open interest down 820 lots. The centre of the price range edged up, indicating that short-term long capital was more active in managing daily chart. But declining in positions still dominated the market, which showed that long capital was not eyeing on the longer term. On the fundamentals, smelters quoted at high in view of low in-plant inventories. Some brands have been sold out with tight supply on the whole. However, as export businesses turned barely profitable, how the domestic market digests increasing supply after smelters resume operation remains as the market focus. The market shall pay attention to the increases in positions of new contracts and movement of capitals as SHFE 2109 approaches delivery date.
Nickel: The most-traded SHFE 2109 nickel closed up 1.24% or 1740 yuan/mt at 142310 yuan/mt, with open interest down 12553 lots to 72909 lots. SHFE nickel today was largely influenced by overnight US dollar index which fell below 93, SS2109 contract that stayed in congestion, and LME which climbed first then pulled back. Demand and supply gap still exists on the fundamentals, and the market shall pay attention to the demand scenario of stainless steel and new energy sectors.
