SMM Evening Comments (Mar 1): Shanghai Nonferrous Metals Closed Mostly with Gains on Enhanced Expectations for Demand Recovery

SHANGHAI, Mar (SMM) – Shanghai nonferrous metals closed mostly with gains in day trading. On the macro front, the US inflation rate remained elevated and is expected to hover at highs for a while; China's official manufacturing PMI for February recorded 52.6, beating expectations of 50.5; the boom in China's manufacturing sector continued to gain momentum and market expectations for a recovery in demand were further enhanced.

SHFE copper rose 1.96%, aluminium added 1.06%, lead lost 0.13%, zinc gained 1.71%, tin edged up 0.05%, and nickel shed 1.28%.

Copper: The most-traded SHFE 2304 copper closed up 1.96% or 1,350 yuan/mt at 70,080 yuan/mt, with open interest up 4,126 lots to 154,787 lots.

In the spot market, the downstream buyers were active in making inquiries though the purchases were limited. Low-priced sources were favoured by traders as they sought to restock. But goods traders mainly held back from selling and refused to compromise on prices.

Aluminium: The most-traded SHFE 2304 aluminium closed up 1.06% or 195 yuan/mt at 18,675 yuan/mt, with open interest down 9,953 lots to 205,405 lots.

Rising aluminium prices fuelled the trades in east China. The aluminium inventory in south China finally declined, which pointed to growing expectations for rising operating rates in the downstream sector and sustainable demand recovery.

Lead: The most-traded SHFE 2304 lead closed down 0.13% or 20 yuan/mt at 15,340 yuan/mt, with open interest up 428 lots to 53,914 lots.

SHFE lead moved sideways today, and the goods holders made shipment based on market demand with narrowed spot discounts. Secondary lead smelters held prices firm, and downstream enterprises thus turned to purchase primary lead. The transactions of spot goods improved.

Zinc: The most-traded SHFE 2304 zinc closed up 1.71% or 395 yuan/mt at 23,530 yuan/mt, with open interest up 405 lots to 90,009 lots.

The downstream enterprises held back from picking up cargoes against rising zinc prices. The premiums dropped as a result, but some traders still held prices firm. Spot transactions declined significantly compared with yesterday.

Tin: The most-traded SHFE 2304 tin closed up 0.05% or 110 yuan/mt at 209,820 yuan/mt, with open interest up 6,680 lots to 62,445 lots.

In the spot market, the transactions remained poor due to sluggish downstream demand. The quotes of traders were stable from yesterday.

Nickel: The most-traded SHFE 2304 nickel closed down 1.28% or 2,540 yuan/mt at 195,620 yuan/mt, with open interest up 8,621 lots to 80,300 lots.

In the spot market, traders began to offer spot quotes against SHFE 2304 nickel. Spot premiums of Jinchuan nickel were 8,000-8,500 yuan/mt. The average premium was 8,250 yuan/mt, up 2,850 yuan/mt from the previous trading day. Premiums of NORNICKEL nickel stood at 5,200-5,500 yuan/mt. The average premium was 5,350 yuan/mt, an increase of 2,350 yuan/mt from the previous trading day. SHFE nickel prices hit a new low in 2023, and the spot prices also dropped. The prices of nickel briquettes were 195,900-197,000 yuan/mt, down 6,100 yuan/mt from the previous trading day.

[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.]