SHANGHAI, Feb 16 (SMM) – SHFE and LME base metals closed mostly with losses overnight. On the macro front, U.S. retail sales data was stronger than expected, boosting market expectations that the Federal Reserve will keep monetary policy tight for some time to combat inflation.
Copper: LME copper prices closed at $8,868/mt in overnight trading, a decline of 1.66%. Trading volume was 16,000 lots and open interest stood at 244,000 lots.
The most active SHFE 2303 copper contract finished at 68,240 yuan/mt overnight, down 0.89%. Trading volume was 38,000 lots, and open interest stood at 141,000 lots.
On the macro front, U.S. retail sales data was stronger than expected, boosting market expectations that the Federal Reserve will keep monetary policy tight for some time to combat inflation.
In terms of fundamentals, Guangdong's inventory has fallen for two consecutive days, but the decline is limited due to the small amount of outbound shipments. At present, the 2023 annual long-term orders have begun to be implemented. Available goods in the market are adequate. Affected by the continued rise of copper prices and the delivery of the front-month copper contract on SHFE, traders and downstream manufacturers refrained from restocking, muting trades. Although consumption has gradually recovered, end-user enterprises mostly restocked on demand due to the impact of high copper prices. Due to the macro factor and market optimism over a turnaround in the market, it is expected that copper prices will remain rangebound.
Aluminium: The most-traded SHFE 2303 aluminium contract opened at 18,370 yuan/mt overnight before closing at 18,310 yuan/mt, a drop of 180 yuan/mt or 0.97%.
LME aluminium opened at $2,414/mt on Wednesday and closed at $2,388/mt, a decrease of $19.5/mt or 0.81%.
Macro headwinds weighed on base metals. On the fundamentals, the long-awaited output reduction has not been enforced. And the social inventory has kept rising. The market is waiting to see when the demand will show strong recovery. It is expected that aluminium prices will remain rangebound in the short term.
Lead: LME lead opened at $2,103.5/mt and ended 2.75% or $58/mt lower at $2,050/mt in the overnight trading.
The most-traded SHFE 2303 lead contract opened at 15,225 yuan/mt and fell slightly to 15,145 yuan/mt due to the falling LME lead prices, but then rose slightly and finally closed at 15,190 mt , up 35 yuan/mt or 0.23% overnight.
Zinc: Overnight, LME zinc opened at $3,090/mt and went down to close at $3,005/mt, down $92.5/mt or 2.99%. Trading volume dropped to 6,036 lots, and open interest added 978 lots to 200,000 lots. LME zinc inventory decreased by 250 mt to 25,075 mt, a drop of 0.99%.
Overnight, the monthly rate of retail sales in the United States recorded 3% in January, well above the estimate; Europe is expected to raise interest rates by 50 basis points in March, citing that overseas inflation pressures are still high; US dollar strengthened and non-ferrous metal prices generally fell.
The most-traded SHFE 2303 zinc contract fell sharply after opening at 22,860 yuan/mt overnight, and touched a low of 22,660 yuan/mt before rallying and finishing at 22,705 yuan/mt, down 410 yuan/mt or 1.77%. Trading volume was down to 50,343 lots, and open interest gained by 881 lots to 82,382 lots.
The higher-than-expected inflation rate overseas prompted shorts to raise their positions last night, and both domestic and overseas zinc prices weakened. At the same time, recent fluctuations in zinc prices resulted in poor trades in the market, so the downstream enterprises mainly took a wait-and-see stance. Zinc prices are expected to decline further in the near term.
Tin: SHFE tin rebounded after opening at a low point last night. The most-traded SHFE 2303 tin contract closed at 212,180 yuan/mt, with open interest decreased 8,400 lots to 47,850 lots.
Amid falling futures prices, domestic spot market picked up, and warrants decreased. The spot premiums narrowed while the shipments improved. The import window remained open.
SHFE tin prices rebounded after opening at a low point last night and the most-traded SHFE 2303 tin contract closed at 212,180 yuan/mt, with open interest decreasing 8,400 lots. The open interest of SHFE 2304 and other forward-month contracts also decreased.
To sum up, SHFE tin prices remained volatile and the downstream raw material inventory was digested to a certain degree. Imported tin continued to arrive, but imported goods were less cost-effective than the early stage. The overall demand for spot goods was weak, and the discounts were relatively stable.
Nickel: On the supply side, nickel prices rose first and then fell yesterday. The upstream shipments were average, and the market inquiries picked up. In terms of NPI, due to the weakening of stainless steel futures and spot prices, some NPI factories and traders have reduced their quotations. On the demand side, according to SMM research, bid price disclosed by Tsingshan were lower than the previous one, but it was still higher than the traded price of spot. And the orders received by Tsingshan Group were not as good as expected. Alloy companies’ purchasing volume of pure nickel rose amid the falling nickel prices. In general, the demand for pure nickel grew as the prices dropped in the past few days. SMM believes that the nickel prices will move rangebound.
[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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