SMM Evening Comments (Feb 8): Shanghai Nonferrous Metals Closed with Gains with Powell Less Hawkish

SHANGHAI, Feb 8 (SMM) – Shanghai nonferrous metals closed with gains in day trading. The US Fed Chairman Powell said on the morning of February 8 that if the economic readings continued to exceed expectations, the rate hike path will continue, and the terminal rate will be higher. The market interpreted it as hawkish but was less severe than the market had expected, hence the non-US currencies rose again, benefiting non-ferrous metals prices.

SHFE copper rose 0.93%, aluminium gained 0.71%, lead grew 0.2%, zinc jumped 0.32%, tin advanced 3.2%, and nickel ticked up 1.31%.

Copper: The most-traded SHFE 2303 copper closed up 0.93% or 630 yuan/mt at 68,640 yuan/mt, with open interest down 2,374 lots to 160,063 lots.

In the spot market, market transactions picked up further, and SHFE front-month and next-month spread kept expanding in contango structure, and the spot discounts narrowed to around 20 yuan/mt.

Aluminium: The most-traded SHFE 2303 aluminium closed up 0.71% or 135 yuan/mt at 19,180 yuan/mt, with open interest up 6,767 lots to 193,247 lots.

On the demand side, demand in aluminium ingot, billet and downstream alloy sectors are recovering, which has been reflected in the spot market. On the supply side, expectations for production reduction still exist, thus aluminium prices are supported. Although aluminium inventory is still in accumulation cycle, the growth is expected to slow down in the future. Aluminium prices are expected to go up.

Lead: The most-traded SHFE 2303 lead closed up 0.2% or 30 yuan/mt at 15,245 yuan/mt, with open interest down 3,618 lots to 69,592 lots.

In the spot market, the cargo holders were more active in selling after SHFE lead rebounded, and downstream players also started to make inquiries on easing risk aversion sentiment. Market transactions picked up slightly with some purchasing on rigid demand.

Zinc: The most-traded SHFE 2303 zinc closed up 0.32% or 75 yuan/mt at 23,470 yuan/mt, with open interest down 2,543 lots to 80,772 lots.

SMM refined zinc output stood at 511,200 mt in January, down 14,600 mt or 2.77% MoM, and down 6,400 mt or 1.23% YoY. The actual figure was slightly higher than the original estimate of 504,600 mt. The supply pressure extends, but the macro front has been bullish recently.

Tin: The most-traded SHFE 2303 tin closed up 3.2% or 6,910 yuan/mt at 222,920 yuan/mt, with open interest down 227 lots to 32,123 lots.

In the spot market, the smelters reserved the willingness to make quotes, while some stood wait-and-see. The overall shipments were poor as SHFE tin rose.

Nickel: The most-traded SHFE 2303 nickel closed up 1.31% or 2,740 yuan/mt at 212,370 yuan/mt, with open interest up 1,696 lots to 71,197 lots.

In the spot market, Jinchuan nickel was in premiums of 7,300-7,500 yuan/mt, with an average of 7,400 yuan/mt, flat from the previous trading day. NORNICKEL nickel was in premiums of 6,500-6,600 yuan/mt, with an average of 6,550 yuan/mt, up 50 yuan/mt on a daily basis. The cargoes that have cleared customs when the imported window opened have not arrived at the market, and tight supply allowed a rally in nickel price. For nickel briquette, the prices stood between 216,000-217,000 yuan/mt, up 1,400 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.]