SMM Evening Comments (Aug 24): Shanghai Nonferrous Metals Closed Mostly with Gains

SHANGHAI, Aug 24 (SMM) – Shanghai nonferrous metals closed mostly with gains. On the macro front, preliminary value of eurozone August manufacturing PMI stood at 49.7, slightly lower than the previous 49.8, but higher than the forecast value of 49, which is seen as a mildly bullish factor.

Shanghai copper rose 0.96%, aluminium advanced 2.66%, lead added 0.2%, zinc jumped 0.69%, tin climbed 0.13%, and nickel fell 1.36%.

Copper: The most-traded SHFE 2209 copper closed up 0.96% or 600 yuan/mt at 63,420 yuan/mt, with open interest down 8,302 lots to 126,048 lots.

On the macro front, preliminary value of eurozone August manufacturing PMI stood at 49.7, slightly lower than the previous 49.8, but higher than the forecast value of 49. The preliminary value of U.S. August Markit manufacturing PMI was 51.3, with the previous reading at 52.2 and the estimate at 52.

In the spot market, the quotes extended the momentum the previous morning. Mainstream standard-quality copper was in premiums of 560-570 yuan/mt, almost the same as that of good-quality copper, but there were few successful transactions heard. The premiums then fell to 500-520 yuan/mt around the end of the first trading session, coupled with the rising inflows of imports. The premiums of mainstream standard-quality copper fell below 500 yuan/mt in the second trading session.

Aluminium: The most-traded SHFE 2209 aluminium closed up 2.66% or 495 yuan/mt to 19,090 yuan/mt, with open interest up 10,003 lots to 139,139 lots.

SHFE aluminium rose above 19,000 yuan/mt with the animation of longs, and closed at 19,090 yuan/mt. On the macro front, energy cost in the Europe continued to rise, putting more pressure on local aluminium smelters, and there is possibility that the capacity will be completely closed. SHFE aluminium is expected to maintain momentum in the near term.

Lead: The most-traded SHFE 2209 lead closed up 0.2% or 30 yuan/mt at 15,080 yuan/mt, with open interest down 2,412 lots to 35,476 lots.

SHFE lead was resilient today, and the traders quoted based on market dynamics. But the spot premiums fell, and secondary lead was also offered with large discounts. The downstream mainly purchased on demand, while large manufacturers sourced with long-term orders. The retail market was still muted.

Zinc: The most-traded SHFE 2209 zinc closed up 0.69% or 175 yuan/mt at 25,495 yuan/mt, with open interest down 3,569 lots to 94,127 lots.

Domestic consumption remained sluggish, which capped the growth of SHFE zinc. The spot premiums were still high without any highlights in terms of transactions. Tianjin, which accommodates a number of galvanising plants, failed to see any successful transactions, and the local premiums are likely to fall with inflows of sources from the south. The impact of power rationing is gradually fading as the temperature falls. Refined zinc output in August is expected to rise to 530,000-540,000 mt, weakening the support on the supply side.

Tin: The most-traded SHFE 2210 tin closed up 0.13% or 260 yuan/mt at 199,390 yuan/mt, with open interest up 1,422 lots to 32,045 lots.

In the spot market, the quotes from the smelters were stable, with few changes. The number of quotes for non-deliverable brands from the traders were still low in morning trade, and the premiums were quite resilient. The premiums of different brands changed little. The spot transactions picked up slightly when the prices fell to some extent. SHFE tin warrants fell 40 mt to 2,304 mt, and LME tin inventory rose 150 mt to 4,240 mt.

Nickel: The most-traded SHFE 2210 nickel closed down 1.36% or 2,350 yuan/mt at 170,920 yuan/mt, with open interest up 7,936 lots to 46,398 lots.

On the supply side, refined nickel production was normal, and the SHFE/LME price ratio was once again favourable for the imports. For NPI, the losses of NPI plants, though still existed, recovered after nickel ore prices dropped in the early stage. On the demand side, rising stainless steel futures prices boosted the market sentiment, and the transactions improved slightly compared with that at the beginning of the month. The fabricators in Zhejiang and Jiangsu have been increasingly less affected by the power supply restrictions. In terms of alloy, there is still rigid demand in the military sector, but the civil sector has contracted significantly. To sum up, the downstream sectors were still poor as a whole, offering less support to 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.]