SMM Evening Comments (Feb 26): Shanghai nonferrous metals declined for the most part, aluminium advanced 1.36%

SHANGHAI, Feb 26 (SMM) – SHFE nonferrous metals broadly fell on Friday February 26 as global markets are roiled by a sudden spike in bond yields, which sent investors fleeing highly valued segments of the market.

Shanghai nonferrous metals, except for aluminium, traded lower on Friday February 26. Tin dropped 4.47% to lead the losses, copper shed 2.06%, lead declined 1.79%, zinc went down 0.53% and nickel fell 3.18%, while aluminium advanced 1.36%.

The ferrous complex rose across the board. Iron ore increased 1.72%, rebar rose 0.09%, and hot-rolled coil climbed 0.33%.

Copper: The most-traded SHFE 2104 copper contract finished the day 2.06% lower at 67,950 yuan/mt. Open interest fell 13,203 lots to 141,000 lots.

The yield of US 10-year treasury bonds hit a one-year high of 1.61%, and the yield of 5-year treasury bonds rose above the important inflection point of 0.75%, which sounded the alarm for risky assets. The collapse of short-term bonds will be the key risk of emerging markets. However, several Fed officials unanimously declared that there is no need to worry about the rise in US bond yields, because it is only a signal of economic optimism. They stressed that the Fed had no plans to tighten policy prematurely. The US dollar index picked up slightly in the case of a sharp drop in the euro, which suppressed the continuous upward trend of copper prices to some extent.

The monthly rate and annual rate of the US core PCE price index in January, and whether the market can improve the bullish sentiment and drive the copper prices to rise again will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2104 aluminium contract finished the day 1.36% higher at 17,465 yuan/mt. Open interest fell 9,183 lots to 216,438 lots.

Zinc: The most-active SHFE 2104 zinc contract climbed to an intraday high of 21,995 yuan/mt and closed down 0.53% at 21,490 yuan/mt. Open interest fell 1,710 lots to 71,075 lots. SMM data showed that social inventories of refined zinc ingots across Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Shandong and Hebei increased 37,600 mt in the week ended February 26 to 262,100 mt. The stocks rose 9,700 mt from Monday February 22.

Nickel: The most-traded SHFE 2104 nickel contract ended the day 1.79% lower at 155,595 yuan/mt today. Open interest fell 938 lots to 43,560 lots. Nickel ore inventories across all Chinese ports decreased 614,000 wmt from February 18 to 7.26 million wmt as of February 26, showed SMM data.

Lead: The most-traded SHFE 2104 lead contract slid to a session low of 15,510 yuan/mt and ended the day 1.79% lower at 15,595 yuan/mt. Open interest fell 938 lots to 43,560 lots. Social inventories of lead ingots across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin gained 3,300 mt from February 18 and rose 2,100 mt from February 22 to 46,700 mt as of Friday February 26, an SMM survey showed.

Tin: The most-liquid SHFE 2104 tin contract fell to a session low of 183,370 yuan/mt and finished the day 4.47% lower at 184,400 yuan/mt today. Open interest fell 5,542 lots to 20,725 lots.