SMM Evening Comments (Jul 27): Shanghai Nonferrous Metals Moved Rangebound amid Cautiousness ahead of Fed Meeting

SHANGHAI, Jul 27 (SMM) – Shanghai nonferrous metals moved rangebound and closed mixed today as the market was cautious ahead of the US Fed rate meeting, which is expected to offer a glance into the price moves in the next two months.

Shanghai copper rose 0.59%, aluminium advanced 1.15%, lead fell 0.3%, zinc added 0.35%, tin lost 1.26%, and nickel slid 1.24%.

Copper: The most-traded SHFE 2209 copper closed up 0.59% or 340 yuan/mt at 58,390 yuan/mt, with open interest up 1,189 lots to 153,367 lots.

On the macro front, the annualised U.S. new home sales fell 8.1% in June, falling to the lowest level in more than two years. The U.S. dollar index ended a three-day losing streak to close up 0.7% on Tuesday. The European energy crisis weighed heavily on the euro, causing it to plunge 1.03% against the dollar overnight.

In the spot market, spot premiums kept falling today. Standard-quality copper was originally in premiums of 420 yuan/mt in morning trade, with few transactions. The premiums then dropped to 400 yuan/mt as some traders were in need of cash around month-end, and some sources were even quoted at premiums of 390 yuan/mt. The spread between good and standard-quality copper stood unchanged at 10-20 yuan/mt.

Aluminium: The most-traded SHFE 2209 aluminium closed up 1.15% or 205 yuan/mt to 18,055 yuan/mt, with open interest up 4,091 lots to 178,295 lots.

In the spot market, cargo holders were active in making shipments, while the downstream remained wait-and-see. Spot discounts expanded as traders were in need to collect capitals at the end of the month.

Lead: The most-traded SHFE 2209 lead closed down 0.3% or 45 yuan/mt at 15,185 yuan/mt, with open interest down 1,701 lots to 56,221 lots.

SHFE lead futures prices dropped today, while the quotes from cargo holders changed little. The downstream was more active in making inquiries, while secondary lead was still sold with large discounts. The buyers with rigid demand favoured secondary lead.

Zinc: The most-traded SHFE 2209 zinc closed up 0.35% or 80 yuan/mt at 22,720 yuan/mt, with open interest up 2,123 lots to 106,681 lots.

The futures market was guided by the macro sentiment without significant changes on the fundamentals. The futures market remained rangebound as a whole approaching the Fed monetary meeting, which is expected to offer a glance into the price moves in the next two months.

Tin: The most-traded SHFE 2209 tin closed down 1.26% or 2,440 yuan/mt at 191,770 yuan/mt, with open interest up 4,365 lots to 52,107 lots.

In the spot market, some smelters lowered their offers in morning trade along with falling futures prices; while more quotes were heard from the traders, and the premiums remained stable as a whole despite dropping futures prices. Market transactions picked up, and the shipments in Guangdong were less robust than that in Shanghai.

Nickel: The most-traded SHFE 2208 nickel closed down 1.24% or 2,180 yuan/mt at 173,060 yuan/mt, with open interest down 10,686 lots to 48,023 lots.

On the supply side, spot premiums of pure nickel dropped amid rising supply recently. On the demand side, though pure nickel prices surged, alloy sector still preserved some rigid demand. For nickel sulphate, production with nickel sulphate had little cost efficiency, and there were currently no transactions with briquette.

[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.]