SHANGHAI, Nov 23 (SMM) – Shanghai nonferrous metals closed with mixed performance. Zinc surged amid supply fears after Glencore said that it is shutting down some zinc production capacity in Europe due to high energy prices, and the steeply rising ferrous products also boosted the SHFE board.
Shanghai copper rose 0.43%, aluminium was flat, lead jumped 1.36%, zinc surged 3.47%, tin lost 0.88%, and nickel advanced 3.22%.
Copper: The most-traded SHFE 2201 copper closed up 0.43% or 300 yuan/mt to 70740 yuan/mt, with open interest up 14793 lots to 172977 lots.
On the macro front, Mr. Biden nominated Federal Reserve Chair Powell for second four-year term, arousing hawkish response in the market. Bets on first interest rate hike has been advanced from July, 2022 to June, 2022. Hence, the US dollar index rocketed, suppressing copper prices to some extent. It is reported that the US will announce on Tuesday the earliest about the strategic release of crude oil reserves jointly with China, Japan, India and South Korea, under which the international oil prices moved up again, offering support to copper prices.
Tonight, the market shall watch the November Markit manufacturing and service industry PMIs in US and euro zone as well as the moves of LME board.
Aluminium: The most-traded SHFE 2201 aluminium closed down 0.08% or 15 yuan/mt to 19135 yuan/mt, with open interest down 5387 lots to 214750 lots.
The blizzard in north China is likely to delay the transportation of some aluminium products. The spot market in east China saw continued restocking activities, and the spot discounts in east China has narrowed by 20 yuan/mt to 60 yuan/mt over SHFE 2112. Aluminium prices moved up amid improving spot transactions and ferrous products’ bottoming out.
Lead: The most-traded SHFE 2112 lead closed up 1.36% or 200 yuan/mt at 14945 yuan/mt, with open interest down 3088 lots to 45904 lots.
In spot market, lead prices are correcting from the continuous falls last week. And the smelters mostly held the prices firm on the combination of low inventory on the smelter side and bullish outlook. The discounts of primary lead shrank mildly to 100 – 150 yuan/mt over SMM 1# lead, and most smelters still delivered for long-term contracts.
In the trading market, the traders became more active in making shipments amid rising lead prices, and the mainstream quotes over SHFE 2112 were in discounts of 30 – 0 yuan/mt. The in-plant inventory of secondary refined lead at smelters has been low, hence the transactions under small orders were slack. The mainstream quotations of secondary refined lead over SMM 1# lead were basically flat, and the discounts only narrowed slightly. While the downstream demand has been moderate, and the buyers preferred the trading market in light of tight supplies from smelters. Meanwhile, the recovery of secondary lead output has been less than expected, sending bullish factors to the market.
Zinc: The most-traded SHFE 2201 zinc closed up 3.47% or 795 yuan/mt at 23710 yuan/mt, with open interest up 9739 lots to 91492 lots.
Glencore announced that it is shutting down some zinc production capacity in Italy in addition to the production cuts already made elsewhere in Europe, amid high energy prices. In China, the zinc ingot output estimate in December weakened. And the soaring ferrous products also pushed up non-ferrous metals.
On the demand side, the downstream participants were not interest in purchase in light of zinc prices. And zinc prices may move strongly in the short term on potentially falling zinc production. However, the market shall stay alert on pessimism triggered by sluggish consumption.
Tin: The SHFE 2112 tin closed down 0.88% or 2560 yuan/mt at 287820 yuan/mt, with open interest down 3717 lots to 27167 lots.
On the fundamentals, the inventory under warrants dropped slightly, and the spot market saw more difficulties in making shipments, which might be the leading cause of intraday price declines. And the spot premiums declined. However, considering the palpable moves of capitals from front-month contract to next-month contract today, the comparatively violent price volatility has been a natural result.
Nickel: The most-traded SHFE 2112 nickel closed up 3.22% or 4770 yuan/mt to 152750 yuan/mt, with open interest up 8053 lots to 97159 lots.
Currently, the pure nickel inventory has been low and dropped continuously, underpinning nickel prices. However, the support was weak amid a comparatively balanced supply and demand pattern. Nickel prices are likely to stay high in the short term as there are no strong bearish factors.