SMM Evening Comments (Feb 25): Shanghai Base Metals Mostly Pulled Back in the Trading on Friday, Lead gained 0.84%

SHANGHAI, Feb 25 (SMM) – Shanghai base metals generally closed with losses in the intraday trading on Friday. SHFE copper fell 0.25%, aluminium dropped 1.44%, zinc decreased 0.28%, nickel lost 5,090 yuan/mt, while lead rose by 0.84%.

Copper: The SHFE 2204 copper contract opened at 71,360 yuan/mt today, and dropped by 0.25% or 180 yuan/mt to close at 70,690 yuan/mt, after hitting the highest and lowest prices at 71,640 yuan/mt and 70,550 yuan/mt respectively. The trading volume was 113,707 lots, and the open interest increased by 1,575 lots to 132,993 lots.

Aluminium: The SHFE 2204 aluminum contract opened at 23,190 yuan/mt on Friday, with an intraday high and low at 23,265 yuan/mt and 22,450 yuan/mt respectively before closing down 330 yuan/mt or 1.44% from yesterday at 22,510 yuan/mt. The trading volume stood at 460,141 lots, and the open interest stood at 219,909 lots.

Lead: The SHFE 2204 lead contract opened at 15,555 yuan/mt on Friday, and hit the highest and lowest points at 15,640 yuan/mt and 15,515 yuan/mt respectively, before closing at 15,615 yuan/mt, up 130 yuan/m or 0.84% from Tursday. The trading volume was 58,754 lots, and the open interest was 56,193 lots.

Zinc: The SHFE 2204 zinc contract opened at 25,000 yuan/mt on Friday, with an intraday high and low at 25,065 yuan/mt and 24,525 yuan/mt respectively before closing down 70 yuan/mt or 0.28% from yesterday at 24,715 yuan/mt. The trading volume stood at 241,395 lots, and the open interest stood at 134,759 lots.

Nickel: The SHFE 2204 nickel contract opened at 182,000 yuan/mt today, and closed at 174,450 yuan/mt, down 5,090 yuan/mt. The trading volume rose by 109,000 lots, and the open interest increased by 4,882 lots. As a lot of shorts have entered the market, the prices will lack upward momentum in the near term.  

On the macro front, the Russia-Ukraine tense continued to intensify and significantly affect the commodity prices. After Russia announced the recognition of the independence of two regions of Ukraine, the VIX reached a maximum of 32.24 on Tuesday. The LME cash to three month Contango of nickel contract expanded from $522/mt on Monday to $645/mt on Tuesday. Over 20% of the global refined nickel supply comes from NORNICKEL in Russia, and the export of this plant is facing sanctions due to the military actions, which will impact the refined nickel supply in Europe and US markets. The wider Contango of nickel contracts indicates that the overseas market is worrying about the tighter nickel supply amid the military conflicts. While China’s imports of refined nickel may increase. Hence the LME nickel prices have outperformed the SHFE nickel prices, and the domestic import losses have increased.   

In the spot market, the premiums of Jinchuan nickel stood at 1,850 yuan/mt over the SHFE 2203 nickel contract, flat from the previous day, while that of NORNICKEL nickel dropped by 100 yuan/mt to 950 yuan/mt. The transactions of Jinchuan nickel remained sluggish amid tight supply. The transactions of NORNICKEL nickel were also slack at around 1,000 yuan/mt. The premiums of nickel briquette stood at 3,000-3,500 yuan/mt over the most traded SHFE 2204 nickel contrat, and the transactions were thin.  

Tin: The SHFE 2204 aluminium contract opened at 23,190 yuan/mt on Friday, with an intraday high and low at 23,265 yuan/mt and 22,450 yuan/mt respectively before closing down 330 yuan/mt or 1.44% from yesterday at 22,510 yuan/mt. The trading volume stood at 460,141 lots, and the open interest stood at 219,909 lots.