SMM Evening Comments (May 15): Shanghai Nonferrous Metals Closed Mixed on Increasing Risk Aversion Sentiment

SHANGHAI, May 15 (SMM) - Shanghai nonferrous metals closed mixed in day trading. The poor performance of domestic and foreign economic data in recent days has led to a rise in risk aversion sentiment in the market.

SHFE copper gained 0.93%, aluminium rose 1.26%, lead closed down 0.33%, zinc grew 0.31%, tin lost 0.85%, and nickel added 1.44%.

Copper: SHFE 2306 copper gained 600 yuan/mt or 0.93% to 64,980 yuan/mt. The open interest fell 11,972 lots to 188,677 lots.

On the first trading day of delivery for the SHFE 2305 copper, spot transactions were subject to fluctuation in the spread between the front-month and next-month contracts. Holders who carried high-quality copper intended to raise their quotes, but the downstream companies only restocked on rigid demand. Quotes offered by the spot holders provided guidance for the spot prices after the delivery of the SHFE 2305 copper. However, the price ratio has grown recently, which brings about uncertainties to the spot prices. SMM believes that the spot premiums will drop after rising after the delivery of the SHFE 2305 copper.

Aluminium: SHFE 2306 aluminium rose 225 yuan/mt or 1.26% to 18,115 yuan/mt. The open interest dipped 8,427 lots to 192,539 lots.

The US debt crisis escalated, while Chinese macro data fell short of expectations, thus market panic has soared. While aluminium ingot social inventories in China kept falling, the demand outlook is pessimistic. Aluminium output continued to rise, and aluminium prices lack cost support. SMM expects the short-term aluminium prices to come under downward pressure. Market players need to closely watch macro aspect and the supply in Yunnan.

Lead: SHFE 2306 lead closed down 50 yuan/mt or 0.33% at 15,200 yuan/mt, with open interest dipping 705 lots to 59,219 lots.

SHFE lead continued to drop, reducing the spot traders' shipments. But the overall spot trades still improved today. Spot supply in the market decreased because of the delivery of the SHFE 2305 lead. On the other hand, the supply of primary lead was abundant, sending the traded price to large discounts. The downstream companies purchased on dips. The most-traded SHFE lead contract will move rangebound with occasional declines in the short term on a stable macro front.

Zinc: SHFE 2306 zinc grew 65 yuan/mt or 0.31% to 20,880 yuan/mt. The open interest lost 9,143 lots to 99,158 lots.

Zinc prices rose today, which, coupled with the improved purchases at low prices last Friday, resulted in a slack spot transaction today. But the premiums remained firm since the market supply stood low.

Tin: SHFE 2306 tin lost 1,710 yuan/mt or 0.85% to 199,560 yuan/mt. The open interest fell 3,604 lots to 51,393 lots.

Spot transactions decreased greatly compared with Last Friday. As of noon, the market saw rare trades, but some companies said that their shipments grew.

Nickel: SHFE 2306 nickel added 2,430 yuan/mt or 1.44% to 170,850 yuan/mt. The open interest decreased 757 lots to 74,977 lots.

On May 15, premiums of Jinchuan nickel were 11,000-11,500 yuan/mt. The average premium stood at 11,250 yuan/mt, flat from the previous trading day. NORNICKEL nickel was quoted at premiums of 6,000-6,500 yuan/mt, with an average of 6,250 yuan/mt, down 50 yuan/mt from a day ago. Jinchuan nickel surged on low supply, and the prices may fall somewhat with the ease of supply tightness in the middle of the week. Spot trades improved today on low futures prices.  Nickel briquette prices were 173,900-174,500 yuan/mt, an increase of 1,700 yuan/mt from the previous trading day. The nickel briquette transactions were slack as it was still traded at premiums over nickel sulphate.

[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.]