SMM Evening Comments

Category:-Metal | 02-Aug-2022 04:22 PM

Shanghai nonferrous metals closed all with losses as the geopolitical tensions intensified in Asia with the rumoured visit to Taiwan province of Pelosi, Speaker of the House of Representatives.

Shanghai copper slid 0.72%, aluminium fell 1.79%, lead lost 0.16%, zinc dropped 0.93%, tin shed 2.54%, and nickel declined 0.99%.

Copper: The most-traded SHFE 2209 copper closed down 0.72% or 440 yuan/mt at 60,250 yuan/mt, with open interest down 4,513 lots to 155,093 lots.

On the macro front, ISM national factory activity index fell to 52.8 in July, the lowest since June 2020. The dollar index slipped for a fourth straight day, closing down 0.4% on Monday.

In the spot market, the premium slumped as a whole with the inflow of imports and the traders selling off. Standard-quality copper was quoted with premiums of 270 yuan/mt in morning trade, while pulled back to 250 yuan/mt with few purchases. The premiums dropped further to 220 yuan/mt amid the traders selling off, and the market transactions picked up slightly, before the premiums rallied to 240 yuan/mt. The spread between good and standard-quality copper stood at around 20 yuan/mt.  

Aluminium: The most-traded SHFE 2209 aluminium closed down 1.79% or 330 yuan/mt to 18,070 yuan/mt, with open interest down 6,455 lots to 168,520 lots.

On the supply side, the pressure still exists amid restoring profits. But the consumption side remained low, and the downstream purchased mainly on dips.

Lead: The most-traded SHFE 2209 lead closed down 0.16% or 25 yuan/mt at 15,210 yuan/mt, with open interest up 4,458 lots to 58,758 lots.

On the fundamentals, the supply picked up as the smelters resumed the production. On the other hand, the lead-acid battery factories maintained stable production. Currently, the lead ingot social inventory has been falling, but there is possibility of accumulation after intensive delivery triggered by rising lead prices.

Zinc: The most-traded SHFE 2209 zinc closed down 0.93% or 225 yuan/mt at 23,915 yuan/mt, with open interest up 865 lots to 117,988 lots.

The overall market sentiment was relatively weak amid less-than-expected economic readings in China and abroad. The contract rebounded shortly after the bearish factors like US rate hike priced in, but dropped again amid recession worries.

Tin: The most-traded SHFE 2209 tin closed down 2.54% or 5,070 yuan/mt at 194,540 yuan/mt, with open interest down 8,413 lots to 54,636 lots.

In the spot market, smelters were slightly less willing to sell in morning trade, and the quotes dropped along with the futures prices. The number of quotes from the traders was stable amid amble supplies. The downstream, on the other hand, purchased mainly on rigid demand. SHFE warrants rose 195 mt to 3,656 mt, and LME tin inventory added 130 mt to 3,985 mt.

Nickel: The most-traded SHFE 2209 nickel closed down 0.99% or 1,770 yuan/mt at 177,460 yuan/mt, with open interest down 15,692 lots to 81,252 lots.

The pure nickel supply remained tight as a whole, but was supplemented to some extent. Meanwhile, Indonesia NPI kept flowing back to China, resulting in a supply surplus. On the demand side, the downstream was still less cheering, and the stainless steel sector remained poor.

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