SMM Evening Comments (Feb 24): Shanghai nonferrous metals declined for the most part, copper advanced 0.53%

SHANGHAI, Feb 24 (SMM) – SHFE nonferrous metals broadly fell on Wednesday February 22 as investors turned cautious, despite remarks overnight from Federal Reserve Chair Jerome Powell that attempted to ease some worries around higher interest rates and inflation.

Powell said in his testimony to US Congress that the American economy is a long way from its employment and inflation goals and that it will likely take time for substantial further progress to be achieved. He added that inflation is still “soft” and that the Fed is committed to current policy.

Shanghai nonferrous metals, except for copper, traded lower on Thursday February 3. Zinc dropped 2.29% to lead the losses, aluminium shed 0.48%, lead declined 1.86%, tin went down 1.44% and nickel fell 2%, while copper advanced 0.53%.

The ferrous complex closed mixed. Rebar advanced 0.81%, iron ore rose 0.44%, while hot-rolled coil fell 0.1%.

Copper: The most-traded SHFE 2104 copper contract finished the day 0.53% higher at 67,910 yuan/mt. Open interest fell 520 lots to 153,000 lots.

Federal Reserve Chairman Powell hinted that even if the economic outlook improves, the Federal Reserve will continue to purchase bonds. He downplayed inflation concerns, saying that the recent rise in bond yields expressed the market's "confidence" in the strong economic prospects. On the data side, the consumer confidence index rose to a three-month high in February. In December, the house price index of 20 cities hit the biggest year-on-year increase since 2014, and the market confidence remained hot.

US EIA crude oil inventories as of February 19 and whether the trend of LME copper could continue to drive the SHFE copper will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2104 aluminium contract finished the day 0.48% lower at 16,630 yuan/mt. Open interest fell 1,371 lots to 208,244 lots.

Zinc: The most-active SHFE 2104 zinc contract climbed to an intraday high of 21,695 yuan/mt and closed down 2.29% at 21,290 yuan/mt. Open interest rose 7,934 lots to 77,134 lots. Zinc stocks continued to accumulate in the near term, dragging down zinc prices, which still need to be boosted by consumption in the near term. Whether the contract will test the support of the 10- and 60-day moving average downward will be monitored today, and it is expected that the contract will still fluctuate weakly.

Nickel: The most-traded SHFE 2104 nickel contract ended the day 2% lower at 142,340 yuan/mt today. Open interest fell 21,479 lots to 154,131 lots.

Lead: The most-traded SHFE 2104 lead contract slid to a session low of 15,510 yuan/mt and ended the day 1.96% lower at 15,595 yuan/mt. Open interest rose 4,668 lots to 40,153 lots. Buyers in the trade market have a bearish attitude towards the spot lead prices, and they are mostly on the sidelines. There is a small amount of rigid demand restocking, and fundamentals may be difficult to support the surge of the contract. However, the general rise of nonferrous metals at the beginning of the year may not be over yet. Combined with the recent increase of battery scrap and the production of mine lead concentrate not fully recovering, the cost support below the lead prices moved up. Whether the contract could remain above 15,500 yuan/mt will be monitored tonight.

Tin:The most-liquid SHFE 2104 tin contract fell to a session low of 186,100 yuan/mt and finished the day 1.44% lower at 188,520 yuan/mt today. Open interest fell 7,683 lots to 29,532 lots.