SMM Evening Comments (Jun 29): Shanghai Nonferrous Metals Closed Mixed Stabilising Market Sentiment

SHANGHAI, Jun 29 (SMM) – Shanghai nonferrous metals closed mixed today amid cooling market sentiment, while the market confidence may be boosted by loosening pandemic control measures in China, which is worth of attention.  

Shanghai copper fell 0.92%, aluminium rose 0.1%, lead lost 0.13%, zinc jumped 0.8%, tin slid 6.3%, and nickel shed 0.74%.

Copper: The most-traded SHFE 2208 copper closed down 0.92% or 590 yuan/mt at 63,470 yuan/mt, with open interest up 6,966 lots to 141,986 lots.

Recently, both LME and SHFE copper inventory rose on a weekly basis, indicating that the recovery of demand was less than expected. And domestic inventory is more likely to see an increase amid the current supply and demand.

Aluminium: The most-traded SHFE 2208 aluminium closed up 0.1% or 20 yuan/mt to 19,280 yuan/mt, with open interest down 5,858 lots to 188,719 lots.

In the spot market, traders actively sold off for cash around the middle of the year, but the downstream was less interest in purchasing also due to the mid-year factor. Nonetheless, market sentiment is expected to pick up with the loosening the pandemic controls.

Lead: The most-traded SHFE 2208 lead closed down 0.13% or 20 yuan/mt at 15,170 yuan/mt, with open interest down 347 lots to 49,017 lots.

In the spot market, the discounts narrowed palpably as the traders have finished selling off, and the offers were firmer than yesterday. The downstream purchased on rigid demand, but the actual transactions differed from place to place due to supply market divergence.

Zinc: The most-traded SHFE 2208 zinc closed up 0.8% or 190 yuan/mt at 24,030 yuan/mt, with open interest up 5,124 lots to 114,452 lots.

On the supply side, ore supply tightness remained in place. On the consumption side, the operating rates of galvanising plate/sheet, taking up 70% of zinc consumption across all downstream sectors, rose slightly today as orders placed by traders added slightly when commodity prices were relatively stable. In the spot market, players were mostly on the sidelines after zinc prices corrected. To sum up, supply tightness will underpin zinc prices to some extent.

Tin: The most-traded SHFE 2208 tin closed down 6.3% or 13,440 yuan/mt at 200,010 yuan/mt, with open interest up 20,352 lots to 56,271 lots.

In the spot market, some traders lowered their premiums along with falling futures prices in morning trade, and smelters were also less firm to their prices. The downstream purchased on demand, and falling prices seemed to have little impact on the demand side. SHFE warrants rose 532 mt to 4,186 mt, and LME tin inventory added 75 mt to 3,510 mt on June 28. SHFE warrants rose with a single-day gain of over 500 mt for two straight days, indicating abundant sources in the market. In other words, though smelter maintenance may have an impact on tin ingot supply in the market in the mid-term, short-term supply will be little affected owing to a large number of invisible stocks.

Nickel: The most-traded SHFE 2208 nickel closed down 0.74% or 1,270 yuan/mt at 170,970 yuan/mt, with open interest up 12,352 lots to 71,731 lots.

On the fundamentals, pure nickel imports are expected to arrive this week, and supplies of pure nickel from nickel sulphate manufacturers are already circulating in the market, alleviating the supply tightness. On the demand side, many steel mills disclosed their production cut plans in the afternoon yesterday. For alloy, the demand was weak as a whole. To sum up, nickel prices are likely to remain rangebound amid rising supply.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]