SMM Evening Comments (Aug 9): Shanghai Nonferrous Metals Closed Mostly with Gains amid Improving Market Sentiment

SHANGHAI, Aug 9 (SMM) – Shanghai nonferrous metals closed mostly with gains when the market sentiment improved as the China foreign trade data in July and the first seven months was better than expected, while the unexpectedly robust US job report has indicated stronger economy.

Shanghai copper gained 1.07%, aluminium rose 0.62%, lead added 0.29%, zinc gained 0.41%, tin lost 0.56%, and nickel fell 1.78%.

Copper: The most-traded SHFE 2209 copper closed up 1.07% or 650 yuan/mt at 61,220 yuan/mt, with open interest down 1,351 lots to 160,967 lots.

In the spot market, the premiums dropped quickly. Standard-quality copper was originally in premiums of 200 yuan/mt in morning trade, and then fell to 170-190 yuan/mt amid thin transactions. The SHFE front-month and next-month backwardation expanded to 450 yuan/mt in the second trading session, and the spot premiums fell further to 140-150 yuan/mt, and premiums of 110-120 yuan/mt were also heard in the market. There was barely a spread between good and standard-quality copper.

Aluminium: The most-traded SHFE 2209 aluminium closed up 0.62% or 115 yuan/mt to 18,540 yuan/mt, with open interest up 6,183 lots to 172,884 lots.

Aluminium prices gained some support from energy crisis in the Europe and low aluminium inventory. In addition, the accident of an aluminium smelter in Sichuan province further pushed up aluminium prices. The aluminium contract is expected to remain rangebound with weakening bearish sentiment.

Lead: The most-traded SHFE 2209 lead closed up 0.29% or 45 yuan/mt at 15,315 yuan/mt, with open interest up 4,713 lots to 64,482 lots.

SHFE lead rose again today, and cargo holders mostly quoted with small discounts. Meanwhile, the smelters in Anhui province held the prices firm amid regional power rationing toward secondary lead. The downstream players still purchased on demand, while retail sales were slightly better, though long-term order was still the major transaction method.

Zinc: The most-traded SHFE 2209 zinc closed up 0.41% or 100 yuan/mt at 24,300 yuan/mt, with open interest up 1,726 lots to 120,903 lots.

On the fundamentals, refined zinc output in August is expected to rise MoM, but the production recovery progress in Shaanxi was slow with the goal of controlling cost. The downstream sectors have not yet shown signs of obvious improvement. And zinc prices are likely to remain rangebound in light of weak supply and demand.

Tin: The most-traded SHFE 2209 tin closed down 0.56% or 1,100 yuan/mt at 194,850 yuan/mt, with open interest up 5,263 lots to 55,236 lots.

In the spot market, quotes from smelters dropped slightly from yesterday, while the difference between mainstream brands narrowed, with a few smelters hiking their offers amid tight supply. The sources of non-deliverable brands were still tight, while the number of quotes for deliverable brands dropped, according to feedback form the traders. Market shipment was stable, and the transactions picked up slightly.  

Nickel: The most-traded SHFE 2209 nickel closed down 1.78% or 3,050 yuan/mt at 168,470 yuan/mt, with open interest up 1,665 lots to 83,826 lots.

The import window remained open recently, and the imported goods have begun to arrive in China, pressuring domestic spot premiums. NPI prices dropped amid less demand from stainless steel mills after production cuts. The new energy sector has recovered, generating robust demand for nickel.

[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.]