SHANGHAI, Mar 15 (SMM) – LME and SHFE base metals closed mostly with gains last night. On the macro front, the US CPI in February met market expectations and was lower than the previous value, and did not fall more than expected. That made the market have no clear judgement on the Fed’s interest rate hike path, and the US index fluctuated widely overnight.
Copper: LME copper prices closed at $8,827/mt overnight, a decline of 1.13%. Trading volume was 19,000 lots and open interest stood at 246,000 lots. The most active SHFE 2304 copper contract finished at 68,570 yuan/mt overnight, up 0.44%. Trading volume was 27,000 lots, and open interest stood at 141,000 lots.
On the macro front, the US CPI in February met market expectations and was lower than the previous value, and did not fall more than expected. That made the market have no clear judgement on the Fed’s interest rate hike path, and the US index fluctuated widely overnight. With the backwardation on SHFE as the delivery of the SHFE March copper contract nears, sellers raised their quotes. But downstream barely accepted price hikes. Some downstream buyers placed orders on March 13 when copper prices dipped. Trades in east China were quiet. Inventories in south China ended a five-day losing streak and rose slightly, mainly due to weakening consumption. At the same time, the downstream is worried that copper prices will continue to fall, and their desire to replenish cargoes was weak. In terms of consumption, although end-user demand is slowly recovering, fluctuations in copper prices will have a major impact on consumption increase. In terms of prices, the recent US banking crisis has hit copper prices. It is expected that with the market panic subsiding, the slow recovery of consumption will give support to copper prices.
Aluminium: The most-traded SHFE 2304 aluminium contract opened at 18,325 yuan/mt overnight and then climbed to 18,420 yuan/mt before closing at 18,350 yuan/mt, up 60 yuan/mt or 0.3%. LME aluminium opened at $2,321/mt on Tuesday and closed at $2,352/mt, an increase of $32/mt or 1.38%.
On the macro level, the US CPI was in line with expectations, thus the downward pressure on non-ferrous metals has eased. On the fundamentals side, aluminium production cuts tightened supply in the south China market. Downstream demand has gradually picked up, driving social stocks to fall. Aluminium prices are expected to move rangebound.
Lead: LME lead opened at $2,077/mt last night and rose 0.07% to $2,083.5/mt, with the lowest and highest prices at $2,060/mt and $2,107/mt respectively.
The most-traded SHFE 2304 lead contract opened at 15,260 yuan/mt and grew 20 yuan/mt or 0.13% to 15,245 yuan/mt, after briefly hitting the lowest point at 15,230 yuan/mt and the highest point at 15,250 yuan/mt.
Zinc: Overnight, LME zinc opened at $2,953.5/mt, touching a high and low at $2,956.5/mt and $2,915/mt, and closed down $38/mt or 1.29% at $2,917.5/mt. Trading volume was down to 7,569 lots, and open interest lost 1,261 lots to 186,000 lots. LME zinc inventory decreased by 250 mt to 37,900 mt, a drop of 0.66%. Since US CPI for February came in line with expectations and fell from the previous print, LME zinc remained volatile.
The most-traded SHFE 2304 zinc contract opened higher at 22,960 yuan/mt and closed at 22,825 yuan/mt overnight, down 60 yuan/mt or 0.26%. Trading volume was down to 52,859 lots, and open interest fell by 593 lots to 82,104 lots. Basically, domestic refined zinc output is expected to reach about 560,000 mt in March, when downstream demand is performing well with operating rates of galvanising plants hovering at a high level of 75%. Given the relatively balanced supply and demand, SHEF zinc is likely to remain rangebound without major changes on the macro front.
Tin: SHFE 2304 tin contract rose last night and close at 187,050 yuan/mt, up 0.49%.
On the fundamentals, the warrants rose significantly yesterday approaching the delivery of SHFE 2303 contract. But the spot market was cold amid wait-and-see sentiment. In the spot market, the discounts of small brands remained stable. The supply of imported tin was scarce.
To sum up, the resumption of tin market needs to rely on the recovery of downstream consumption and the inventory digestion. Downstream processing companies cannot actually digest inventory by stocking up at low prices, and they still need to pay close attention to the progress of consumer confidence restoration.
Nickel: On the supply side, nickel prices rebounded slightly yesterday. The spot premiums stabilised, and intraday spot transactions were poor. Traders and some NPI plants undercut their prices due to the high inventory and the slack market. On the demand side, according to SMM research, the spot quotations of stainless steel and the stainless steel mills’ guidance prices varied greatly. Alloy companies mainly purchased on demand amid the poor orders. To sum up, the pure nickel sector faces weak supply and demand, weighing on nickel prices.
[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.]
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