SMM Evening Comments (Jul 13): Shanghai Nonferrous Metals Closed Mixed with Eyes on US Inflation

SHANGHAI, Jul 13 (SMM) – Shanghai nonferrous metals closed mixed with eyes on US inflation due today, while rising US dollar index still put pressure on non-ferrous metals.

Shanghai copper fell 3.3%, aluminium lost 3.69%, lead slid 0.93%, zinc dropped 3.59%, tin gained 0.92%, and nickel added 0.9%.

Copper: The most-traded SHFE 2208 copper closed down 3.3% or 1,910 yuan/mt at 56,030 yuan/mt, with open interest up 7,115 lots to 153,759 lots.

US Federal Reserve Bank of Richmond President Balkin said the US economy is slowing as consumers are hit by inflation and the pandemic-driven demand for goods has returned to more normal levels.

In the spot market, supply was relatively tight, and the market prices moved all the way up as goods holders held the prices firm. Market inquiries were active when the futures prices stood around 56,000 yuan/mt. Standard-quality copper was firstly in premiums of 150 yuan/mt in morning trade, which was quickly sold off. The premiums then rose to 160-170 yuan/mt, and the inquiries were still active, which dropped when the premiums rose to 180-190 yuan/mt in the afternoon. Spread between good and standard-quality copper was firmly around 10-20 yuan/mt, and premiums of the former were around 170-200 yuan/mt.

Aluminium: The most-traded SHFE 2208 aluminium closed down 3.69% or 660 yuan/mt to 17,225 yuan/mt, with open interest down 6,790 lots to 169,601 lots.

Rising supply and yet-to-materialise stimulus packages weighed on aluminium prices, and there is higher possibility of an oversupply in the third and fourth quarters. And production cuts are not quite likely though aluminium prices have dropped below the industrial average cost, as aluminium smelters profited considerably in the past two years and the cost may fall in the future.

Lead: The most-traded SHFE 2208 lead closed down 0.93% or 140 yuan/mt at 14,880 yuan/mt, with open interest down 1,513 lots to 48,634 lots.

Traders refrained from selling when SHFE lead futures prices fell, and awaited delivery of SHFE 2207 contract. The downstream still purchased on rigid demand, and turned to the trading market as smelters quoted higher.

Zinc: The most-traded SHFE 2208 zinc closed down 3.59% or 845 yuan/mt at 22,675 yuan/mt, with open interest up 7,021 lots to 107,836 lots.

In the spot market, the de-stocking of social inventory slowed down, and weaker support from the fundamentals was unable to hold zinc prices firm with bears on the macro front.

Tin: The most-traded SHFE 2208 tin closed up 0.92% or 1,790 yuan/mt at 196,770 yuan/mt, with open interest down 5,880 lots to 41,718 lots.

In the spot market, quotes offered by smelters and traders changed little from a day ago, while more traders engaged in the trading market in the morning. But the downstream kept purchasing on rigid demand, and the overall transactions were thin.

Nickel: The most-traded SHFE 2208 nickel closed up 0.9% or 1,510 yuan/mt at 169,850 yuan/mt, with open interest up 9,365 lots to 86,533 lots.

On the fundamentals, constant import profits shored up the pure nickel imports. On the demand side, repeating COVID recently shadowed the stainless steel market, while the alloy market was also negatively impacted by wobbling nickel prices and high premiums. To sum up, nickel prices gained some support from low pure nickel inventory, and are expected to remain rangebound.

[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.]