SMM Evening Comments (Jan 5): Shanghai Nonferrous Metals Closed with Losses on Multiple Bears

SHANGHAI, Jan 5 (SMM) – Shanghai nonferrous metals closed with losses on multiple bears. In the early hours of January 4, the Federal Reserve released the minutes of its December monetary policy meeting, which showed that: the United States is determined to rein inflation, warning the market not to underestimate its will to maintain high interest rates for some time. The Fed's attitude continues to be hawkish, and the US index rebounded to over 104. US API crude oil inventories in the week of December 30 were far more than expected, and international oil prices plunged. In China, the demand lacked momentum.

Shanghai copper lost 1.15%, aluminium fell 0.56%, lead slid 0.95%, zinc shed 0.73%, tin dropped 1.29%, and nickel declined 5.19%.

Copper: The most-traded SHFE 2302 copper closed down 1.15% or 750 yuan/mt at 64,290 yuan/mt, with open interest down 1,129 lots to 98,354 lots.

According to SMM research, some downstream fabricators have advanced their holiday plans, hence the market was increasingly worried about the demand outlook. SHFE copper is unlikely to rebound above 65,000 yuan/mt, and the support at 63,000 yuan/mt is worth attention.

Aluminium: The most-traded SHFE 2302 aluminium closed down 0.56% or 100 yuan/mt at 17,905 yuan/mt, with open interest up 5,850 lots to 172,219 lots.

The power rationing in south-west China dragged down the domestic operating aluminium capacity. Once downstream enterprises resume their production, regional supply shortages will occur in the first quarter. However, the short-term aluminium prices will face downward pressure due to falling domestic and overseas demand, inventory accumulation, as well as weaker cost support. Downstream operating rates fell in the off-season, and spot market was muted.

Lead: The most-traded SHFE 2302 lead closed down 0.95% or 150 yuan/mt at 15,675 yuan/mt, with open interest down 6,276 lots to 58,765 lots.

SHFE lead kept falling today, and the traders quoted based on the market dynamics. The discounts today remained largely unchanged, and downstream players mostly purchased in the form of long-term orders. The spot market was relatively quiet, and the successful transactions were mostly sources from the smelters.

Zinc: The most-traded SHFE 2302 zinc closed down 0.73% or 170 yuan/mt at 23,170 yuan/mt, with open interest down 539 lots to 89,264 lots.

The TCs of zinc concentrate were raised again in January to as high as 5,700 yuan/mt in some places. Some smelters gradually ramped up the production amid proper prices, sufficient raw materials and lucrative profits. In addition, the zinc ingot social inventory began to accumulate, which will potentially weigh on zinc price.

Tin: The most-traded SHFE 2302 tin closed down 1.29% or 2,700 yuan/mt at 207,380 yuan/mt, with open interest down 5,341 lots to 43,438 lots.

In the spot market, the smelters retained the willingness to quote, while some were firm to their prices. The premiums/discounts offered by the traders changed little, and market transactions picked up after SHFE tin fell today. The downstream players still purchased on rigid demand.

Nickel: The most-traded SHFE 2302 nickel closed down 5.19% or 12,060 yuan/mt at 220,290 yuan/mt, with open interest down 9,575 lots to 63,011 lots.

Jinchuan nickel was in premiums of 7,000-7,500 yuan/mt, with an average of 7,250 yuan/mt, up 1,250 yuan/mt on a daily basis. NORNICKEL nickel was in premiums of 6,000-6,500 yuan/mt, with an average of 6,250 yuan/mt, down 500 yuan/mt from the previous trading day. The absolute spot prices fell today after SHFE nickel opened low overnight when Tsingshan started to release high-grade nickel matte and US Fed adhered to rate hike path. For nickel briquette, the prices stood between 227,800-228,400 yuan/mt, down 9,050 yuan/mt from a day ago.

[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.]