SHANGHAI, Oct 18 (SMM) – Shanghai nonferrous metals all closed in the positive territory with significant increase following the big gains on Friday, as the global energy crisis intensifies and a new round of power rationing in China is likely to or has kicked off.
Shanghai copper advanced 3.61%, aluminium rose 3.83%, lead added 3%, zinc soared 7.99%, tin increased 5.11%, and nickel climbed 3.79%.
Copper: The most-traded SHFE 2111 copper closed up 3.61% or 2660 yuan/mt to 76270 yuan/mt, with open interest down 4369 lots to 158195 lots.
On the macro front, US retail sales in September rose out of expectation, but the consumer confidence index has fallen to a low second to the last seen in the past decade, heightening inflation fears. Nonetheless, Christine Lagarde, President of European Central Bank, said that the “current inflation is unlikely to continue”, and the central bank will keep supporting the economic development. The copper prices were strong on the back of global energy crisis.
On the fundamentals, the proportion of LME cancelled warrants touched a high of 92.2% as of last Friday. The backwardation of LME contracts stood at $257/mt. On the other hand, domestic social inventories stood at a comparatively low level, offering some support to copper prices.
Tonight, the market shall watch the US industrial output in September on a monthly basis.
Aluminium: The most-traded SHFE 2111 aluminium closed up 3.83% or 910 yuan/mt to 24695 yuan/mt, with open interest down 18933 lots to 172374 lots.
The domestic output of aluminium fell in September due to the energy consumption control, which is the fifth consecutive month of decline. Yunnan announced officially that it will shift out the outdated and low-efficient capacity, which involves the aluminium sector, boosting market sentiment. However, the recent rising inventory and falling operating rates have triggered market concerns of weakening demand, forming resistance for aluminium prices.
Lead: The most-traded SHFE 2111 lead closed up 3% or 460 yuan/mt at 15790 yuan/mt, with open interest down 2043 lots to 50679 lots.
The lead prices rose amid production reduction of overseas lead-zinc smelters and new round of power rationing in Anhui, Jiangsu and Henan.
In the spot market, the quotes from primary lead smelters were largely unchanged. The goods available in the market were limited in the first trading after the delivery of SHFE 2110, and the market participants held back goods to keep the prices firm. The spot transaction has been subdued. The mainstream quotes in Zhejiang and Jiangsu stood at discounts of 40 – 30 yuan/mt over SHFE 2111, and the downstream purchase was cautious amid rising prices, and the buyers favoured long-term contracts.
For secondary lead, the mainstream quotes were offered at discounts of 50 – 80 yuan/mt over SMM 1#lead, some were reported with discounts of 300 – 350 yuan/mt in Hunan. The downstream purchase was mainly made on rigid demand due to the continuing rising lead prices.
The lead ingot inventory in the five major markets in China stood at 193,900 mt, down 5,800 mt from last Friday October 15.
Zinc: The most-traded SHFE 2111 zinc closed up 7.99% or 2050 yuan/mt at 27720 yuan/mt, with open interest down 12597 lots to 98966 lots.
The overseas production reduction amid rising electricity and carbon emission costs has been intensifying. Though Glencore announced that it will only apply staggered production, the market still heated up as it takes up a large amount of the total production.
On the fundamentals, the zinc ingot inventory in Shanghai, Guangdong and Tianjin increased 6,100 mt over the weekend, and those in seven markets rose 8,100 mt. The downstream purchase demand may fall to nearly zero amid surging zinc prices and soon-to-arrive zinc ingots released by the National Food and Strategic Reserves Administration.
Tin: The SHFE 2111 tin closed up 5.11% or 14320 yuan/mt at 294300 yuan/mt, with open interest up 2548 lots to 28991 lots.
On the fundamentals, the spot supply was still tight, and the social inventory stood at a low level, containing the uncertainties in demand caused by short-term sufficient supply and power rationing, which shall be able to push up the tin prices from the logic front.
Nickel: The most-traded SHFE 2111 nickel closed up 3.79% or 5510 yuan/mt to 150990 yuan/mt, with open interest down 2531 lots to 90566 lots.
The non-ferrous metals rose broadly amid the production reduction of overseas zinc smelters. The SHFE nickel rallied to above 150,000 yuan/mt, recovering the losses in September. The ferronickel sector is more obviously influenced by the power rationing, while the demand from the stainless steel sector picked up. The demand from the new energy sector was still robust. And the low inventory of nickel will support the nickel prices to some extent.