SMM Evening Comments (Aug 15): Shanghai Nonferrous Metals Mostly Closed with Losses amid Disappointing Social Financing in July

SHANGHAI, Aug 15 (SMM) – Shanghai nonferrous metals closed mostly with losses amid the disappointing social financing in July, which was only 60% of the market expectation.

Shanghai copper shed 1.98%, aluminium fell 3.54%, lead slid 2.09%, zinc lost 2.52%, tin dropped 3.29%, and nickel declined 4.07%.

Copper: The most-traded SHFE 2209 copper closed down 1.98% or 1,240 yuan/mt at 61,480 yuan/mt, with open interest down 2,977 lots to 159,259 lots.

In the spot market, the traders started to quote against SHFE 2209 contract. Standard-quality copper was originally in premiums of 330 yuan/mt over SHFE 2209, but the transactions were muted. The premiums then dropped to 320 yuan/mt in the second trading session. Premiums of good-quality copper were stable amid scarce sources in the market, which stood at 350-360 yuan/mt, with the spread with standard-quality copper expanding.

Aluminium: The most-traded SHFE 2209 aluminium closed down 3.54% or 660 yuan/mt to 18,010 yuan/mt, with open interest down 14,532 lots to 155,802 lots.

The power rationing in Sichuan province escalated recently, and the 1.07 million mt of installed capacity is likely to be completely shut down for a short period of time, easing the supply pressure. However, the downstream sectors are also in the seasonal low, and the power rationing further contained their demand. As such, aluminium prices will remain rangebound in the near term.

Lead: The most-traded SHFE 2209 lead closed down 2.09% or 320 yuan/mt at 14,985 yuan/mt, with open interest down 5,049 lots to 54,980 lots.

As SHFE 2208 was delivered today and SHFE lead plummeted below 15,000 yuan/mt, the downstream players were more active in making inquiries. The discounts offered by cargo holders narrowed, and some even rose to the positive territory. Some traders purchased on dips, while most downstream players purchased on demand. Transactions in the spot market slightly better.

Zinc: The most-traded SHFE 2209 zinc closed down 2.52% or 635 yuan/mt at 24,575 yuan/mt, with open interest down 9,526 lots to 123,551 lots.

On the macro front, China July social financing stood at 679 billion yuan, which is only 60% of the expected 1,125 billion yuan. The longs left the market with pessimism, and the futures dropped across the board. On the fundamentals, zinc prices gained less support amid weakening consumption, thus entered the downward track. But as refined zinc output is expected to fall again in August, zinc prices are unlikely to experienced steep rises or drops in the near term.

Tin: The most-traded SHFE 2209 tin closed down 3.29% or 6,730 yuan/mt at 198,040 yuan/mt, with open interest up 1,828 lots to 47,365 lots.

In the spot market, spread among quotes offered by smelter expanded in morning trade, while some smelters held the prices firm. The number of quotes for non-deliverable brands from traders were still scarce, and the spot premiums did not change much though the futures contract slumped. The transactions in the spot market picked up compared with last Friday, and the downstream was more interest in purchasing after the prices drew back.

Nickel: The most-traded SHFE 2209 nickel closed down 4.07% or 7,380 yuan/mt at 174,160 yuan/mt, with open interest down 4,779 lots to 78,337 lots.

In the spot market, Jinchuan nickel were in premiums of 3,800-4,500 yuan/mt, down 1,850 yuan/mt from the last trading day; NORNICKEL nickel was in premiums of 2,500-3,500 yuan/mt, down 500 yuan/mt from the last trading day. Premiums of pure nickel slumped today as the transactions have remained poor amid high spot prices. The cost efficiency of nickel briquette was still close to zero, and there were basically no trades heard.

[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.]