SHANGHAI, Aug 30 (SMM) – Shanghai nonferrous metals market closed with large gains except for lead as the Fed central banking annual meeting sent out a dovish signal on taper.

Shanghai copper barely gained 1.83%, aluminium surged 3.92%, lead fell 1.07%, zinc rose 1.14%, tin climbed 2.41%, and nickel soared 4.54%.

Copper: The most-traded SHFE 2110 copper closed up 1.83% or 1260 yuan/mt to 70130 yuan/mt, with open interest up 2632 lots to 129300 lots. LME was closed today.

On the macro front, Fed Chair Powell expressed that dialling-back of bond purchase could start as early as this year, but the Fed would not rush to interest rate hike. Fed governor Waller said that interest rate hike set a much higher threshold than tapering. While Cleveland Fed Chair Mester believed that tapering shall begin by end of this year and complete by mid-2022. Market sentiment was more dovish as tapering was not a signal for early interest rate hike, pulling up non-ferrous metals.

On the data front, US personal expenditures in July decelerated while price index rose. Consumer Confidence Index was still sluggish approaching end of August. Inflation and the COVID-19 have both brought down market expectations for an early tapering decision.

Tonight, the market shall focus on Dallas Fed manufacturing index for August. If the data stands above zero, it shows that the manufacturing sector is expanding, and vice versa.

Aluminium: The most-traded SHFE 2110 aluminium closed up 3.92% or 810 yuan/mt to 21495 yuan/mt, with open interest up 9141 lots to 355000 lots.

Domestic social aluminium inventories stood at 753000 mt, slightly down 1000 mt from last Thursday, still offering support to aluminium prices. There were rumours that significant output cut in Guangxi, pushing aluminium prices to new highs (see our news coverage today).

Lead: The most-traded SHFE 2110 lead closed down 1.07% or 165 yuan/mt to 15210 yuan/mt, with open interest up 10083 lots to 85601 lots. In spot market, mainstream primary lead smelters quoted with premiums at 0-80 yuan/mt. Prices weakened as purchase demand failed to pick up approaching month end. Smelters therefore were unwilling to make shipment. For secondary lead, prices were sluggish. Mainstream transactions were made with discounts at 200-320 yuan/mt over SMM1# lead, and only a few was made with discounts at around 100 yuan/mt. Narrowing price spread between refined lead and lead scrap has pushed some downstream participants to purchase refined lead.

Meanwhile, lead ingot inventories in five major markets in China totalled 206300 mt on Monday August 20, up 6300 mt on the week. Secondary lead smelters have lowered their acceptance price as battery scrap prices remained high, but the cost pressure was still great. Lead prices are expected to move rangebound mildly amid rising social inventories and slow recovery in consumption.

Zinc: The most-traded SHFE 2110 zinc closed up 1.14% or 255 yuan/t at 22635 yuan/mt, with open interest up 3416 lots to 92679 lots. On the macro front, the Fed central banking meeting opened with hawkish rhetoric, but turned to dovish after Powell delivered his speech, emphasizing on the uncertainties brought by the delta variant.

On the fundamentals, market quotes stabilised after the third batch of government reserves to be released was confirmed. Transactions in Ningbo were not bad today as the downstream sector was keen to purchase on dips in face of rallies in zinc prices. While low social inventory has suppressed downtrend room of Shanghai premiums.

Tin: The most-traded SHFE 2110 tin closed up 2.41% at 244850 yuan/mt, with open interest up 4073 lots. On the fundamentals, low in-plant inventory at smelters and decreasing SHFE inventory both pointed to tight market supply. The market shall watch if the tightened supply will be eased amid rising TCs at smelters and more quotes heard in the spot market today.

Nickel: The most-traded SHFE 2110 nickel closed up 4.54% or 6400 yuan/mt at 147280 yuan/mt, with open interest up 30523 lots to 150155 lots. On the macro front, commodity trading rallied amid dovish stance of the Fed. Demand for nickel from the new energy sector was strong, and production schedule at stainless steel mills was hectic, tightening nickel supply.