SMM Evening Comments (May 20): Nonferrous metals on the SHFE fell broadly, nickel tumbled 3.7%

SHANGHAI, May 20 (SMM) – SHFE nonferrous metals declined for the most part on Thursday. Copper fell 2.02%, aluminium lost 1.85%, zinc plunged 2.34%, nickel tumbled 3.7% and tin slid 2.04%, while lead gained 0.99%.

Social inventories of primary aluminium ingots across eight consumption areas in China, including SHFE warrants, decreased 41,000 mt from last Thursday to 1.02 million mt as of May 20. Stocks in all of the eight places except Chongqing fell.

SMM data showed that aluminium billet stocks across the five major consumption areas — Foshan, Wuxi, Huzhou, Changzhou and Nanchang — in China decreased 15.8% or 16,600 mt from a week ago to 88,600 mt as of Thursday May 20.

Copper: The most-traded SHFE 2107 copper contract slumped 2.02% to finish the day at 73,690 yuan/mt, with open interest rising 5,547 lots to 119,000 lots.

US Federal Reserve’s meeting minutes showed that some Fed officials were open to discussing debt purchase reduction in the “next few meetings”, and the interest rate market raised their expectations for interest rate hikes. The State Council of China required that unreasonable price increases of commodities should be curbed, and monetary policy and exchange rate stability should be maintained

US weekly jobless data and German producer price index (PPI) for April are set for release tonight.

Aluminium: The most-active SHFE 2107 aluminium contract declined 1.85% to close the day at 19,140 yuan/mt, with open interest losing 2,971 lots to 233,000 lots.

Zinc: The most-liquid SHFE 2107 zinc contract ended the day 2.34% lower at 22,490 yuan/mt, with open interest decreasing 8,772 lots to 68,912 lots. Although some US Fed officials were open to discussing debt purchase reduction in the “next few meetings” and the State Council of China required to curb unreasonable rises in commodities prices, power curtailment in Yunnan and Guangxi affected local zinc production, which supported zinc prices.  

Nickel: The most-traded SHFE 2107 nickel contract tumbled 3.7% to finish the day at 128,210 yuan/mt, with open interest losing 3,786 lots to 104,000 lots.

Lead: The most-active SHFE 2106 lead contract gained 0.99% to close the day at 15,735 yuan/mt, with open interest losing 3,814 lots to 39,487 lots. Relatively high inventories of lead ingots may not be able to boost spot lead prices, but tightening lead concentrate supply and firm battery scrap prices lend support to lead prices.

Tin: The most-liquid SHFE 2107 tin contract fell 2.04% to end the day at 195,290 yuan/mt, with open interest decreasing 3,440 lots to 32,932 lots, and it is expected to move between 192,000-198,000 yuan/mt tonight.