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SMM Morning Comments (Jan 14): Base Metals Mixed as Investors Are Less Confident in Rising US Dollar
Jan 14, 2022 10:00CST
Source:SMM
Shanghai base closed mixed yesterday, as the comparatively dovish stance of Fed President Powell weakened the inventors bid in a rising US dollar index, and the market was also less sensitive to the news concerning Fed’s interest rate hike.

SHANGHAI, Jan 14 (SMM) – Shanghai base closed mixed yesterday, as the comparatively dovish stance of Fed President Powell weakened the inventors bid in a rising US dollar index, and the market was also less sensitive to the news concerning Fed’s interest rate hike.

LME base metals mostly went up in the overnight trading. Copper dropped 0.23%, aluminium rose 0.44%, lead gained 0.56%, and zinc advanced 0.74%.

SHFE base metals were mixed last night. Copper dropped 0.46%, aluminium lost 1.3%, lead won 1.27%, and zinc advanced 0.1%.

Copper: Three-month LME copper opened at $9,957/mt and moved up to $10,008.5/mt, and closed at $9,963/mt, down 0.23%. The trading volume was 15,000 lots, and the open interest was 248,000 lots. Three-month LME copper is expected to trade between $9,860-9,960/mt today.

The SHFE 2203 copper contract opened at 71,790 yuan/mt last night, pulling to the highest point at 72,120 yuan/mt and then falling to 71,220 yuan/mt. It closed at 71,620 yuan/mt, down 0.46%. The trading volume was 41,000 lots, and the open interest was 136,000 lots. SHFE copper is expected to trade between 71,100-71,600 yuan/mt today, with spot premiums between 60-180 yuan/mt.

On the macro front, the market became less sensitive to news concerning Fed’s interest rate hike, as Powell indicated it was no rush to raise the rate, weakening investors’ confidence in rising US dollar index. The overnight US dollar index dropped gain, supporting copper futures. In the spot market, the prices touch a level above 72,000 yuan/mt again, suppressing downstream demand. The front month-next month spread also changed from Contango to Backwardation, pulling down the quotations.

Aluminium: LME aluminium opened at $2,950.5/mt on Thursday and closed at $2,958/mt, an increase of $13/mt or 0.44%.

Overnight, the most-traded SHFE 2202 aluminium contract opened at 21,515 yuan/mt, with the highest at 21,535 yuan/mt before closing at 21,305 yuan/mt, down 280 yuan/mt or 1.3%.

On the supply side, the operating aluminium capacity is likely to rise in January. On the demand side, the social inventory of aluminium kept falling amid less arrivals, though the operating rates of processing companies dropped continuously. The market shall be alert to the moves of longs for risk aversion triggered by high aluminium prices.

Lead: Three-month LME lead opened at $2,333.5/mt and closed $13/mt or 0.56% higher at $2,350/mt in the trading yesterday, after hitting the highest level at $2,366.5/mt.

The most-liquid SHFE 2203 lead contract rose 1.27% or 195 yuan/mt to end at 15,595 yuan/mt in the overnight trading yesterday, after briefly hitting the highest point at 15,685 yuan/mt.

Zinc: LME zinc opened at $3,544.5/mt on Wednesday, and hit a high of $3,569.5/mt before closing at $3,560.5/mt, an increase of $26/mt or 0.74%. The trading volume fell to 7,466 lots, and open interest fell to 254,000 lots. Overnight LME inventory dropped 2,975 mt to 184,950 mt, down 1.58%. The Vazante mine (an annual capacity of 140,000 mt) in Brazil reduced its daily output by 60% due to rainstorm, and is expected to return to normal after the rainfalls, which is worth of market attention. It is expected the contract will move between $3,530-3,580/mt today.

Overnight, the most-traded SHFE 2203 zinc contract opened at 25,000 yuan/mt and hit a high of 25,060 yuan/mt before closing at 24,950 yuan/mt, up 25 yuan/mt or 0.1%. Trading volume was 52,577 lots, and open interest increased by 2,250 lots to 89,655 lots.

On the supply side, the TCs were low amid disruptions to overseas mining activities. The restocking demand recently was low amid high zinc prices and less robust than in previous years. In the spot market, the downstream stood on the sidelines in light of high prices, resulting in sluggish purchases. The SHFE 2203 zinc is expected to move between 24,700-25,200 yuan/mt, and 0# Shuangyan zinc will be in premiums of 150-170 yuan/mt over SHFE 2202.

Nickel: SHFE nickel opened at 162,890 yuan/mt in the overnight trading and then moved between 163,000-164,000 yuan/mt and closed at 163,910 yuan/mt, up 1,790 yuan/mt or 1.1%.

On the supply side, the spot supplies picked up limitedly, and the spot premiums were at a high level. On the demand side, the transactions were thin as the downstream purchased on rigid demand in light of high prices.

Tin: Overnight, the SHFE 2202 tin contract moved in a narrow range yesterday. On the fundamentals, the spot shipments were stable, and warrants inventory rose significantly. The supply and demand remained weak.


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aluminium
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zinc
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