SMM Evening Comments (Jul 14): Shanghai Nonferrous Metals Closed All with Losses amid Historically High US Inflation

Published: Jul 14, 2022 18:00

Save

Shanghai nonferrous metals closed all with losses as the US consumer price index jumped 9.1% year-on-year in June, the biggest rise in over 40 years. The market is even weighing a rate hike by 100 basis points in July.

SHANGHAI, Jul 14 (SMM) – Shanghai nonferrous metals closed all with losses as the US consumer price index jumped 9.1% year-on-year in June, the biggest rise in over 40 years. The market is even weighing a rate hike by 100 basis points in July.

Shanghai copper fell 1.21%, aluminium lost 1.17%, lead slid 1.64%, zinc dropped 4.7%, tin declined 0.88%, and nickel shed 5.83%.

Copper: The most-traded SHFE 2208 copper closed down 1.21% or 680 yuan/mt at 55,450 yuan/mt, with open interest down 5,111 lots to 148,648 lots.

On the macro front, US consumer price index jumped 9.1% year-on-year in June, the biggest rise in over 40 years. The Fed officer Mester said there was no convincing evidence that inflation had peaked and CPI data suggested the Fed would raise interest rates in July by no less than the 75 basis points it did in June. In a survey by the Chicago Fed, the US economic outlook indicator fell to -60 in June, the lowest level since data became available in 2013, and the data suggested the current US economic outlook was even tougher than at the peak of the COVID pandemic.

In the spot market, market players began to quote against the SHFE 2208 contract, and the spread between SHFE 2207 and 2208 contract moved in wide range. Standard quality copper was in premiums of 200 yuan/mt over SHFE 2208 in the morning, and the traders held firm to the prices amid tight supply. The buyers were also cautious. Good-quality copper was also firmly in premiums of 220 yuan/mt over SHFE 2208, but market transactions were less cheering.

Aluminium: The most-traded SHFE 2208 aluminium closed down 1.17% or 205 yuan/mt to 17,255 yuan/mt, with open interest down 9,700 lots to 159,901 lots.

On the fundamentals, the demand side was still sluggish, which was further aggravated by the seasonal low. On the supply side, the production has been rising without news of production cuts for the moment. In addition, the aluminium ingot social inventories across China’s eight major markets totalled 697,000 mt as of July 14, down 26,000 mt from last Thursday and 136,000 mt lower than in the same period last year. A wave of downstream dip buying was seen in the middle of this week.

Lead: The most-traded SHFE 2208 lead closed down 1.64% or 245 yuan/mt at 14,655 yuan/mt, with open interest up 5,995 lots to 54,629 lots.

The traders quoted based on market situation, and began to quote against SHFE 2208 amid approaching delivery of SHFE 2208. Smelters, meanwhile, refrained from selling at lower prices amid falling lead futures prices. The downstream purchased on demand, and the retail market remained unchanged.

Zinc: The most-traded SHFE 2208 zinc closed down 4.7% or 1,085 yuan/mt at 22,020 yuan/mt, with open interest up 612 lots to 108,448 lots.

SHFE zinc was dragged down by LME zinc which dropped below $3,000/mt. On the fundamentals, the consumption side remained weak, and the market was overwhelmed by pessimism on the macro front. Hence supply tightness has been unable to underpin zinc prices.

Tin: The most-traded SHFE 2208 tin closed down 0.88% or 1,710 yuan/mt at 191,600 yuan/mt, with open interest up 8,130 lots to 49,848 lots.

In the spot market, smelters were less active in making quotes, and mainstream smelters were slightly firm to the prices. According to the traders, the premiums of brands changed little from a day ago, and market transactions were still thin; some traders made zero transactions as of noon. The downstream mainly purchased on rigid demand.

Nickel: The most-traded SHFE 2208 nickel closed down 5.83% or 9,810 yuan/mt at 158,560 yuan/mt, with open interest up 2,567 lots to 89,100 lots.

On the fundamentals, domestic pure nickel production increased, while SHFE/LME price ratio rose. On the demand side, the alloy sector picked up, but the stainless steel market was still quiet. To sum up, nickel prices are unlikely to rise significantly amid rising primary nickel 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.]

Market

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

7 hours ago

Alchemy Resources Starts Drilling Copper-Gold Targets at Yellow Mountain

Alchemy Resources announced on September 11 that reverse-circulation drilling has commenced across its Yellow Mountain and Overflow projects in New South Wales, Australia, with up to 15 holes planned during the latest exploration campaign. At the 80%-owned Yellow Mountain project, drilling will test extensions to previously identified copper-gold and polymetallic mineralisation, as well as two previously undrilled geophysical targets. Previous drilling at Yellow Mountain returned an intersection of 113 metres grading 1.17% copper equivalent, comprising 0.33% copper, 0.37 g/t gold, 24.3 g/t silver, 0.86% lead and 1.23% zinc. The latest drilling campaign is designed to test whether the known mineralised system extends into newly identified target areas. The program will also include drilling at the Overflow project, where Alchemy is targeting extensions to existing mineralisation along strike and at depth. Overflow currently hosts an inferred mineral resource of approximately 342,000 ounces of gold equivalent and contains gold, silver, copper, lead and zinc mineralisation. The commencement of drilling provides a near-term test of the scale and continuity of mineralisation at Yellow Mountain. The previously reported broad copper-gold-polymetallic intersection indicates potential for a sizeable mineralised system, while the newly defined geophysical targets provide additional exploration upside. Drilling results will be important in determining whether the mineralised footprint can be materially expanded.

7 hours ago

Freeport CEO Signals Likely Go-Ahead for $4.5 Billion Bagdad Copper Expansion

Freeport-McMoRan Chief Executive Officer Kathleen Quirk has indicated that the company expects to move forward with the proposed expansion of its Bagdad copper mine in Arizona, marking a stronger commitment to the project ahead of a formal investment decision. Speaking at the Jefferies Global Industrials Conference on September 10, Quirk said the project still requires input from Freeport's board but that she expects the company will proceed. She described the expansion as a roughly three-year construction project and noted that no major permitting hurdles are expected. Freeport's latest project estimates put capital expenditure for the Bagdad expansion at approximately US$4.5 billion, around 30% above the previous US$3.5 billion estimate, reflecting cost escalation, scope changes and additional engineering. The project would more than double concentrator capacity at Bagdad and is expected to add approximately 200–250 million lb, or around 91,000–113,000 tonnes, of copper production annually, alongside an additional 10–12 million lb of molybdenum. Bagdad currently has a reserve life exceeding 80 years. Freeport's Q2 2026 regulatory filing had described the project as being prepared for a potential investment decision during the second half of 2026. The latest comments therefore represent a more positive signal from management on the likelihood of development, although formal board approval has not yet been announced. A decision to proceed with Bagdad would represent one of Freeport's most significant near-term copper growth investments in the US. The potential addition of more than 90,000 tonnes per year of copper would materially increase Freeport's US output, although first production would remain several years away given the expected construction period. Attention will now turn to formal board approval and a final investment decision.

7 hours ago

Chile July Copper Output Falls 9.4% YoY; Escondida Slumps 22.1%

According to foreign media reports citing data from the Chilean Copper Commission (Cochilco), Chile's copper production fell 9.4% year on year in July 2026, as output declined sharply at several major operations in the world's largest copper-producing country. Copper production at state-owned Codelco fell 5% year on year to 112,800 tonnes in July, extending a period of weaker output for the company amid operational challenges at key mines. Production at BHP-controlled Escondida, the world's largest copper mine, dropped more sharply, falling 22.1% year on year to 89,400 tonnes. In contrast, output at Collahuasi, jointly owned by Anglo American and Glencore, increased 12.3% year on year to 38,400 tonnes. Chile's National Statistics Institute (INE) separately reported mine copper production of 403,424 tonnes in July. The country's Mining Production Index fell 7.2% year on year, while metallic mining activity declined 10.7%, mainly due to lower copper extraction and processing. Foreign media reports also cited severe weather in northern Chile and maintenance at major operations as factors weighing on July production. Cochilco currently forecasts Chilean copper production at approximately 5.27 million tonnes in 2026, down 2.6% year on year, before recovering 5.2% to around 5.55 million tonnes in 2027. The sharp July decline highlights continued pressure on Chilean mine supply. The 22.1% year-on-year drop at Escondida is particularly significant given the mine's scale, while lower Codelco production further weighs on national output. Although Collahuasi recorded higher production, the increase was insufficient to offset weakness elsewhere. A recovery in major operations during the remainder of the year will be important if Chile is to limit the full-year decline projected by Cochilco.

7 hours ago