SHANGHAI, Jul 12 (SMM) – Shanghai nonferrous metals closed mixed today as the repeating pandemic in China affected the market sentiment to some extent, while the investors also weighed the rate hike expectations and energy shortage.
Shanghai copper fell 2.4%, aluminium lost 3.7%, lead rose 1.52%, zinc inched down 0.02%, tin gained 2.45%, and nickel added 0.94%.
Copper: The most-traded SHFE 2208 copper closed down 2.4% or 1,410 yuan/mt at 57,320 yuan/mt, with open interest up 616 lots to 146,644 lots.
Expectations that the Fed will continue to raise rates sharply sent the US dollar to record highs, with the greenback surging 1.23% overnight to a new high since October 2002 to 108.28. The Fed officer Bostic reiterated his support for another 75 basis point rate hike as the primary goal is to get rates to a more neutral position. In other words, the immediate priority is to get inflation back down to 2%.
In the spot market, the premiums were boosted by better purchases in morning trade amid relatively tight supply. In the morning, standard-quality with premiums of 120 yuan/mt was quickly sold out, and the premiums rose to 130-140 yuan/mt with active purchases by traders and downstream players. In the afternoon, the trading market was again in a stalemate with rising futures prices and premiums, with a few sources priced with premiums of 150 yuan/mt to test market reaction. The spread between good and standard-quality copper was quite narrow.
Aluminium: The most-traded SHFE 2208 aluminium closed down 3.7% or 675 yuan/mt to 17,585 yuan/mt, with open interest up 3,073 lots to 176,304 lots.
Pessimism loomed over the aluminium market amid steadily rising aluminium supply as well as seasonal low across the downstream, especially when the supporting policies have not yet materialised. There is higher possibility of an obvious supply surplus in the third and fourth quarters.
Lead: The most-traded SHFE 2208 lead closed up 1.52% or 225 yuan/mt at 15,070 yuan/mt, with open interest down 3,917 lots to 50,147 lots.
SHFE lead rallied. Goods holders quoted according to market situation approaching the delivery of SHFE 2207, and some quoted with small discounts, while some held the prices firm. Downstream market was comparatively quieter, and purchased from smelters directly in light of greater discounts. The transactions were moderate.
Zinc: The most-traded SHFE 2208 zinc closed down 0.02% or 5 yuan/mt at 23,460 yuan/mt, with open interest up 3,362 lots to 114,818 lots.
Russia's largest natural gas pipeline Nord Stream 1 was closed on Monday for a period of ten days, and potential energy shortage rattled the nerves of market players and pushed up metals prices in the morning. The contract pulled back in the afternoon amid cooling market sentiment and weaker fundamentals.
Tin: The most-traded SHFE 2208 tin closed up 2.45% or 4,610 yuan/mt at 192,460 yuan/mt, with open interest up 178 lots to 47,598 lots.
In the spot market, less smelters made quotes in the morning, and some even raised their offers. According to the traders, the number of quotes changed little from a day ago, so were the premiums. The overall transactions were poor and the downstream still purchased on rigid demand. Rebounding tin prices aggravated the wait-and-see sentiment.
Nickel: The most-traded SHFE 2208 nickel closed up 0.94% or 1,550 yuan/mt at 166,810 yuan/mt, with open interest down 6,495 lots to 77,168 lots.
On the fundamentals, pure nickel production schedules proceeded smoothly, but nickel imports dropped due to shrinking import profits. In terms of stainless steel and alloy, the demand for nickel was still low. Currently, the spread between SHFE front-month and next-month contracts widened, and low inventory offered some support to pure nickel prices. It is expected that nickel prices will remain rangebound in the near term.
[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.]
