SMM Evening Comments (Aug 25): Shanghai Nonferrous Metals Closed Mostly with Gains with Investors Awaiting Jackson Hole Speech

Published: Aug 25, 2022 18:00

Save

Shanghai nonferrous metals closed mostly with gains. The US API and EIA crude oil inventory in the week of August 19 both fell more than expected. And the market players also await the Jackson Hole speech delivered by Powell for guidance for future rate hike path.

SHANGHAI, Aug 25 (SMM) – Shanghai nonferrous metals closed mostly with gains. The US API and EIA crude oil inventory in the week of August 19 both fell more than expected. And the market players also await the Jackson Hole speech delivered by Powell for guidance for future rate hike path.

Shanghai copper fell 0.25%, aluminium edged up 0.03%, lead added 0.76%, zinc jumped 1.48%, tin climbed 0.17%, and nickel rose 2.85%.

Copper: The most-traded SHFE 2210 copper closed down 0.25% or 160 yuan/mt at 62,780 yuan/mt, with open interest up 12,439 lots to 149,094 lots.

On the macro front: (1) U.S. API crude oil inventories in the week of August 19 fell 5.632 million barrels, with the estimate of a fall of 448,000 barrels and a previous reading of an increase of 1.5 million barrels. (bullish ☆) (2) U.S. EIA crude oil inventories in the week of August 19 reported a draw of 3.282 million barrels, with the previous value of a drop of 7.056 million barrels and a forecast of a fall of 933,000 barrels. (bullish ☆)

In the spot market, spot premiums were offered at the lower-end of the price range set yesterday. Standard-quality copper was in premiums of 460-470 yuan/mt in morning trade, and good-quality copper was flat with standard-quality copper. Before the end of the first trading session, some mainstream standard-quality copper was quoted with premiums of less than 400 yuan/mt, alluding market sentiment of forcing down the prices; but these sources were quickly sold out. The premiums rose to and stabilised at 430-440 yuan/mt in the second trading session.

Aluminium: The most-traded SHFE 2209 aluminium closed up 0.03% or 5 yuan/mt to 18,910 yuan/mt, with open interest down 15,649 lots to 123,497 lots.

The shorts reduced their positions today, and SHFE 2209 contract closed flat over the closing price during the night session on August 24. On the news front, the strike in Europe was solved, and Hydro aluminium smelter resumed the production, with SHFE aluminium falling after opening today. Meanwhile, slightly falling domestic aluminium inventory fuelled the contract, which finally closed flat as the de-stocking was very mild.

Lead: The most-traded SHFE 2209 lead closed up 0.76% or 115 yuan/mt at 15,160 yuan/mt, with open interest down 2,878 lots to 32,598 lots.

The recent power rationing had a greater impact on the supply side than on the demand side, hence domestic lead prices, unlike LME lead, have been relatively resilient recently. According to SMM research, the power rationing in Anhui province has eased slightly, with the supply expected to recover next week. Lead prices will see weaker support by then.

Zinc: The most-traded SHFE 2209 zinc closed up 1.48% or 375 yuan/mt at 25,645 yuan/mt, with open interest down 10,093 lots to 84,037 lots.

European energy crisis intensified with natural gas futures prices rose to a record high, and the supply tightness of zinc ingot extended. The TCs for zinc concentrate in China were low, also alluding tight supply amid ongoing power rationing in Sichuan. In terms of demand, the operating rates of galvanising plants fell slightly, while that of die-casing plants rose.

Tin: The most-traded SHFE 2210 tin closed up 0.17% or 340 yuan/mt at 200,120 yuan/mt, with open interest up 1,640 lots to 33,685 lots.

In the spot market, the quotes offered by the smelters fell along with falling futures prices in morning trade, with a few lowering the quotes more significantly. The spot premiums from the traders changed little in morning trade, and the sources of non-deliverable brands were relatively tight. The premiums of brand Yunxi fell slightly. The spot market was modest today, with the downstream players purchasing on rigid demand.

Nickel: The most-traded SHFE 2210 nickel closed up 2.85% or 4,870 yuan/mt at 175,640 yuan/mt, with open interest up 11,830 lots to 58,228 lots.

On the supply side, SHFE/LME price ration fell again, hence the import profits were quite meagre. For NPI, the production has been cut amid poor downstream demand and high inventory. On the demand side, stainless steel futures prices rebounded slowly, and the spot prices were stable. The transactions have not yet improved, but the mood of rate hikes has been strong. In terms of alloy, the orders were normal despite high nickel prices. To sum up, nickel prices are expected to drop in the near term with weaker support as a result of poor demand and falling pure nickel premiums.

[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.]

Market

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

7 hours ago

Yingkou Jianfa Shenghai Phase I 300,000 mt Copper Cathode Project Smelting Furnace Starts Production, Pyrometallurgy System Enters Furnace Drying Stage

At 9:58 on September 12, the core smelting furnace of the pyrometallurgy system at Yingkou Jianfa Shenghai Nonferrous Metals & Chemicals Co., Ltd.'s multi-metal recovery project was successfully ignited, officially entering the furnace drying stage and marking a key step toward full-line commissioning and production. Public information shows that the Yingkou Jianfa Shenghai polymetallic complex gold-silver ore comprehensive recovery technology upgrade, relocation, and expansion project uses copper concentrates as its main raw material, with an overall planned capacity of 600,000 mt/year of copper cathode to be built in two phases, with capacity of 300,000 mt/year in each phase. Phase I is designed to produce 300,000 mt/year of copper cathode and 1.18 million mt/year of sulphuric acid, along with supporting systems for smelting, converting, anode refining, electrolysis, slag beneficiation, and precious metal recovery. After this ignition, the project will carry out standardized furnace drying and hot-state integrated trial runs across the entire system to verify equipment, instruments, interlocks, and automatic control systems. The project has not yet formally started raw material feeding and production; after furnace drying and system commissioning are completed, it will further advance the commissioning of Phase I's 300,000 mt/year copper cathode capacity. If the project is successfully brought into production, it is expected to increase copper smelting capacity in North China and further boost domestic demand for copper concentrate raw materials.

7 hours ago

22 hours ago

Alchemy Resources Starts Drilling Copper-Gold Targets at Yellow Mountain

Alchemy Resources announced on September 11 that reverse-circulation drilling has commenced across its Yellow Mountain and Overflow projects in New South Wales, Australia, with up to 15 holes planned during the latest exploration campaign. At the 80%-owned Yellow Mountain project, drilling will test extensions to previously identified copper-gold and polymetallic mineralisation, as well as two previously undrilled geophysical targets. Previous drilling at Yellow Mountain returned an intersection of 113 metres grading 1.17% copper equivalent, comprising 0.33% copper, 0.37 g/t gold, 24.3 g/t silver, 0.86% lead and 1.23% zinc. The latest drilling campaign is designed to test whether the known mineralised system extends into newly identified target areas. The program will also include drilling at the Overflow project, where Alchemy is targeting extensions to existing mineralisation along strike and at depth. Overflow currently hosts an inferred mineral resource of approximately 342,000 ounces of gold equivalent and contains gold, silver, copper, lead and zinc mineralisation. The commencement of drilling provides a near-term test of the scale and continuity of mineralisation at Yellow Mountain. The previously reported broad copper-gold-polymetallic intersection indicates potential for a sizeable mineralised system, while the newly defined geophysical targets provide additional exploration upside. Drilling results will be important in determining whether the mineralised footprint can be materially expanded.

22 hours ago

Freeport CEO Signals Likely Go-Ahead for $4.5 Billion Bagdad Copper Expansion

Freeport-McMoRan Chief Executive Officer Kathleen Quirk has indicated that the company expects to move forward with the proposed expansion of its Bagdad copper mine in Arizona, marking a stronger commitment to the project ahead of a formal investment decision. Speaking at the Jefferies Global Industrials Conference on September 10, Quirk said the project still requires input from Freeport's board but that she expects the company will proceed. She described the expansion as a roughly three-year construction project and noted that no major permitting hurdles are expected. Freeport's latest project estimates put capital expenditure for the Bagdad expansion at approximately US$4.5 billion, around 30% above the previous US$3.5 billion estimate, reflecting cost escalation, scope changes and additional engineering. The project would more than double concentrator capacity at Bagdad and is expected to add approximately 200–250 million lb, or around 91,000–113,000 tonnes, of copper production annually, alongside an additional 10–12 million lb of molybdenum. Bagdad currently has a reserve life exceeding 80 years. Freeport's Q2 2026 regulatory filing had described the project as being prepared for a potential investment decision during the second half of 2026. The latest comments therefore represent a more positive signal from management on the likelihood of development, although formal board approval has not yet been announced. A decision to proceed with Bagdad would represent one of Freeport's most significant near-term copper growth investments in the US. The potential addition of more than 90,000 tonnes per year of copper would materially increase Freeport's US output, although first production would remain several years away given the expected construction period. Attention will now turn to formal board approval and a final investment decision.

22 hours ago