SMM Evening Comments (Jul 19): Shanghai Nonferrous Metals Closed Mixed amid Falling US Dollar

SHANGHAI, Jul 19 (SMM) – Shanghai nonferrous metals closed mixed after US dollar index hit its weekly low amid easing expectations on an aggressive rate hike.

Shanghai copper rose 1.3%, aluminium added 2.07%, lead climbed 0.97%, zinc fell 0.22%, tin lost 1.99%, and nickel jumped 3.26%.

Copper: The most-traded SHFE 2208 copper closed up 1.3% or 720 yuan/mt at 56,030 yuan/mt, with open interest down 8,647 lots to 122,993 lots.

On the macro front, US dollar index hit its weekly low amid easing expectations on an aggressive rate hike.

In the spot market, standard-quality copper was in premiums of 180 yuan/mt, and sources quoted with premiums of 170 yuan/mt were quite popular. Good-quality copper had no advantage, some traders quoted CCC-P at premiums of 180 yuan/mt to promote the sales, while some quoted with premiums of 190-200 yuan/mt as they were not in a rush to sell. Non-registered copper was in premiums of 100 yuan/mt.

Aluminium: The most-traded SHFE 2208 aluminium closed up 2.07% or 365 yuan/mt to 17,960 yuan/mt, with open interest down 14,088 lots to 128,002 lots.

Aluminium prices rebounded with warming macro sentiment, while the fundamentals were still unable to support the prices. The supply side pressure remained as the smelters had no plans of suspending the production for the moment, and the demand side was still modest.

Lead: The most-traded SHFE 2208 lead closed up 0.97% or 145 yuan/mt at 15,095 yuan/mt, with open interest down 3,777 lots to 38,463 lots.

SHFE lead prices remained high, while goods circulating in the market dropped, with some quoted with high premiums. Smelters, on the other hand, expanded their discounts. Downstream buyers mainly stood on the sidelines following previous restocking, and retail sales weakened.

Zinc: The most-traded SHFE 2208 zinc closed down 0.22% or 50 yuan/mt at 22,330 yuan/mt, with open interest down 4,708 lots to 94,330 lots.

On the fundamentals, the fundamentals remained weak. Downstream operating rates were still low, and the demand for zinc ingot contracted, hence the consumption side failed to boost zinc prices. In addition, TCs could not rise amid ore supply tightness, pressuring the smelters.

Tin: The most-traded SHFE 2208 tin closed down 1.99% or 3,800 yuan/mt at 187,010 yuan/mt, with open interest down 7,692 lots to 37,289 lots.

In the spot market, smelters quoted as usual in morning trade, and non-deliverable brands were quoted flat, with some smelters willing to lower the quotes. According to feedback from traders, the number of quotes heard in the market changed little, and the spread between different brands narrowed. The transactions were still modest as a whole, and the sales performance differed greatly among traders. The downstream purchased on demand.

Nickel: The most-traded SHFE 2208 nickel closed up 3.26% or 4,890 yuan/mt at 154,880 yuan/mt, with open interest down 10,167 lots to 76,281 lots.

On the fundamentals, pure nickel supply was relatively sufficient. On the demand side, the stainless steel market was relatively quiet, while the alloy sector posted little demand due to issues like procurement cycle and high spot premiums. The cost efficiency of nickel briquette used to produce nickel sulphate re-emerged, but there was still no transactions made. On the whole, weak fundamentals are expected to weigh on nickel prices.

[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.]