SMM Evening Comments (Jul 7): Shanghai Nonferrous Metals All Closed with Gains after Hitting Low

SHANGHAI, Jul 7 (SMM) – Shanghai nonferrous metals closed with gains today after bottoming recently amid lingering pessimism on the macro front.

Shanghai copper rose 1.35%, aluminium added 0.82%, lead increased 1.24%, zinc gained 2.99%, tin jumped 0.82%, and nickel advanced 0.21%.

Copper: The most-traded SHFE 2208 copper closed up 1.35% or 780 yuan/mt at 58,640 yuan/mt, with open interest down 11,772 lots to 152,780 lots.

On the macro front, the US dollar index rose to a 20-year high of 107.28 after the US services sector dropped to a more than two-year low in June. The US ISM non-manufacturing PMI registered 55.3 in June, above the forecast of 54.3 but below the previous value of 55.9, falling to its lowest level in two years.

In the spot market, the traded prices dropped again. Standard-quality copper was in premiums of 90-100 yuan/mt, and market transactions were limited, with some traded with premiums of 70-80 yuan/mt. Good-quality copper prices were relatively resilient, and varied between varieties. Prices of Peru large plate and ENM were basically flat with standard-quality copper, while CCC-P and Jinchuan were in firm premiums of 110-120 yuan/mt. The market now favoured non-standard non-registered brands, and the quotes were at flat levels.

Aluminium: The most-traded SHFE 2208 aluminium closed up 0.82% or 150 yuan/mt to 18,360 yuan/mt, with open interest down 4,740 lots to 177,901 lots.

The supply side was still under great pressure, while the demand side remained sluggish. In the spot market, downstream inquires picked up slightly after the prices dropped greatly in the past two days, but the transactions were still muted. Aluminium prices have already dropped to the instant cost.

Lead: The most-traded SHFE 2208 lead closed up 1.24% or 185 yuan/mt at 15,115 yuan/mt, with open interest down 2,583 lots to 49,300 lots.

In the spot market, discounts offered by smelters did not expand after lead futures prices rose, and some traders held back cargos with bullish outlook on the prices. Some secondary refined lead smelters set the ex-factory prices with discounts of 100-50 yuan/mt over SMM #1 lead, and the downstream purchased properly. SHFE lead bottomed out today.

Zinc: The most-traded SHFE 2208 zinc closed up 2.99% or 675 yuan/mt at 23,260 yuan/mt, with open interest down 3,845 lots to 113,034 lots.

The signals released by the US Fed meeting did not exceed expectations, hence the US dollar index dropped 20 points, easing bearishness in the market. SHFE zinc rebounded to the 23,000 yuan/mt level.

Tin: The most-traded SHFE 2208 tin closed up 0.82% or 1,540 yuan/mt at 189,110 yuan/mt, with open interest down 2,688 lots to 49,449 lots.

In the spot market, only a few smelters offered quotes in morning trade, which were unchanged from yesterday. Spot premiums rose slightly due to tighter supply, while market transactions subsided again amid rebounding tin prices. The actual transactions were mostly made with discounts, and the buyers mostly stood wait-and-see after tin prices rebounded.

Nickel: The most-traded SHFE 2208 nickel closed up 0.21% or 340 yuan/mt at 164,230 yuan/mt, with open interest up 2,302 lots to 83,048 lots.

Currently, the fundamentals of pure nickel changed little at present. Refined nickel output in June rose 8.74% MoM in June, and NPI supply was in obvious surplus. On the demand side, the stainless steel and alloy sectors remained sluggish amid resurging COVID again recently.

[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.]