SMM Evening Comments (Jul 21): Shanghai Nonferrous Metals Closed Mostly with Gains

SHANGHAI, Jul 21 (SMM) – Shanghai nonferrous metals closed mostly with gains amid easing pressure from the macro front, while the State Council once again emphasised the steady economic growth.

Shanghai copper fell 0.32%, aluminium rose 0.31%, lead gained 1.23%, zinc added 0.11%, tin advanced 2.71%, and nickel jumped 4.03%.

Copper: The most-traded SHFE 2208 copper closed down 0.32% or 180 yuan/mt at 56,180 yuan/mt, with open interest down 4,234 lots to 111,861 lots.

1. The Premier of the State Council stressed that macro policy is both precise and powerful as well as reasonable and proper, and will not introduce super large-scale stimulus measures, over issue currency or overdraft the future for the sake of excessive growth targets. 2. The National Association of Realtors (NAR) announced that U.S. home sales in June fell 5.4% from the previous month to a seasonally adjusted annual rate of 5.12 million, the lowest level since June 2020.

Spot premiums were firmer than a day ago. Standard-quality and good-quality copper was in premiums of 210 yuan/mt and 230 yuan/mt respectively in morning trade, and hydro-copper ESOX was in premiums of 170 yuan/mt, which is unexpectedly popular among buyers. The traders subsequently raised the premiums of standard-quality and good-quality copper to 230 yuan/mt and 240-250 yuan/mt respectively, with few quotes of hydro-copper. The SHFE 2208 and 2209 contract spread expanded to 170 yuan/mt, suppressing market transactions to some extent.

Aluminium: The most-traded SHFE 2208 aluminium closed up 0.31% or 55 yuan/mt to 17,945 yuan/mt, with open interest down 6,812 lots to 108,457 lots.

The fundamentals of aluminium changed little recently, and the price moves are mainly subject to macro demand. In the spot market, SMM China aluminium ingot inventory stood at 668,000 mt as of Thursday July 21, down 29,000 mt from last Thursday and 161,000 mt from a year ago. And the aluminium ingot social inventory is likely to remain low based on the current rhythm of arrivals and shipments.

Lead: The most-traded SHFE 2208 lead closed up 1.23% or 185 yuan/mt at 15,245 yuan/mt, with open interest down 3,904 lots to 29,608 lots.

Lead ingot inventory kept falling, underpinning lead prices. With the sources from delivered SHFE 2207 contract flowing into the market, market supply picked up slightly, pulling down the spot premiums. And discounts of secondary refined lead expanded to over 300 yuan/mt. The downstream mainly digested in-plant lead stocks, and retail sales were poor.

Zinc: The most-traded SHFE 2208 zinc closed up 0.11% or 25 yuan/mt at 22,660 yuan/mt, with open interest down 4,138 lots to 85,263 lots.

On the supply side, the ore supply tightness eased slightly amid rebounding imports of zinc concentrate in June, and some smelters were planning raising the TCs. On the consumption side, falling zinc prices did not shore up the consumption.

Tin: The most-traded SHFE 2208 tin closed up 2.71% or 5,110 yuan/mt at 193,560 yuan/mt, with open interest down 5,109 lots to 33,421 lots.

In the spot market, smelters were less firm to their quotes in morning trade; while the number of quotes from traders rose slightly with abundant sources in the market, and the spot premiums dropped slightly compared with yesterday, with some quoted with discounts. SHFE warrants fell 30 mt to 3,366 mt, and LME tin inventory remained unchanged at 3,440 mt on July 20.

Nickel: The most-traded SHFE 2208 nickel closed up 4.03% or 6,490 yuan/mt at 167,420 yuan/mt, with open interest down 6,512 lots to 75,327 lots.

On the fundamentals, demand in the stainless steel sector remained muted, and demand from the alloy sector also weakened with rebounding futures prices and high premiums. Producing nickel sulphate with nickel briquette became unprofitable again after nickel prices rebounded, with few transactions of briquette. To sum up, weak fundamentals will still 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.]