SMM Evening Comments (May 27): Nonferrous metals on the SHFE rose across the board, tin increased 1.06%

SHANGHAI, May 27 (SMM) – SHFE nonferrous metals all closed higher on Thursday May 27. Copper added 0.11%, aluminium advanced 1.01%, zinc rose 1.14%, nickel gained 0.71%, lead increased 0.42% and tin strengthened 1.06%.

Social inventories of primary aluminium across eight consumption areas in China, including SHFE warrants, declined 58,000 mt from the prior week to 962,000 mt as of May 27. The recent high season mainly contributed to the decline in inventories.

SMM data showed that stocks of 6063 aluminium billet across the five major consumption areas – Foshan, Wuxi, Huzhou, Changzhou and Nanchang – in China dropped 200 mt from the previous week to 88,300 mt as of May 27.

Copper: The most-traded SHFE 2107 copper contract added 0.11% to finish the day at 71,940 yuan/mt, with open interest rising 3,852 lots to 133,000 lots.

US Federal Reserve officials said that it was still too early to discuss the interest rate increase, and the use scale of the reverse repo tool of the central bank surged for seven consecutive days. The US dollar index rose to 90.05, but due to China’s regulation of commodities prices and the rapid appreciation of the Chinese yuan recently, a large amount of money flowed into China's stock market.

Aluminium: The most-active SHFE 2107 aluminium contract rose 1.01% to close the day at 18,480 yuan/mt, with open interest adding 2,013 lots to 221,000 lots, and it is expected to fluctuate between 18,800-19,780 yuan/mt tonight.

Zinc: The most-liquid SHFE 2107 zinc contract ended the day 1.14% firmer at 22,595 yuan/mt, with open interest increasing 5,324 lots to 93,865 lots.

Nickel: The most-traded SHFE 2107 nickel contract increased 0.71% to finish the day at 126,420 yuan/mt, with open interest rising 1,991 lots to 114,000 lots.

Lead: The most-active SHFE 2107 lead contract closed the day 0.42% higher at 15,420 yuan/mt, with open interest increasing 5,689 lots to 57,714 lots. Operating rates at lead smelters remained high as decent profits of by-products encouraged smelters to maintain production, and this, combined with sluggish consumption, boosted lead social inventories.

Tin: The most-liquid SHFE 2107 tin contract advanced 1.06% to end the day at 198,850 yuan/mt, with open interest rising 2,514 lots to 33,104 lots. According to foreign news on May 26, the earthquake in Goma, the eastern city of the Democratic Republic of Congo, delayed exports of tin ore in the mineral rich North Kivu province. Besides, many smelters in Yunnan suspended production due to local power consumption restriction. The July contract is likely to trade between 193,000-200,000 yuan/mt tonight.