SHANGHAI, Jan 18 (SMM) – Most of the Shanghai base metals settled with declines in the overnight trading session. However, the SHFE and LME tin prices surged around 2.5%.
LME copper rose 0.26%, aluminium rose 0.44%, lead dipped 0.91%, and zinc fell 0.66%.
SHFE copper shed 0.21%, aluminium rose 0.02%, lead dropped 0.32%, and nickel fell 0.07%.
Copper: LME copper prices rose 0.26% to end at $9,756.5/mt in overnight trading. Trading volumes stood 7,183 lots, and open interest stood at 249,000 lots. The most-traded SHFE 2203 copper contract went down 0.21% to close at 70,160 yuan/mt in overnight trading. Trading volume was 28,000 lots, and open interest stood at 132,000 lots. The People’s Bank of China (PBoC) announced yesterday that the winning bid rates for medium-term lending facility operations and open market reverse repurchase operations both fell by 10 basis points. It is generally believed that this move is expected to push LPR further down, and the domestic stock markets rose across the board yesterday. The US dollar stopped falling and rebounded in the past two days, closing up 0.11% on Monday. But the overall weak economic data released by the United States recently made the dollar’s upward momentum insufficient, and copper futures moved rangebound. In terms of spot markets, the copper prices remained firm on tight limited supply. The overall market activity was quiet. It is expected that there will still be some demand in the market before the CNY holidays. If SHFE copper continues to decline, the buying interest may rebound significantly. And the spot quotes may remain strong in the short term. SHFE copper prices are expected to move between 69,900-70,500 yuan/mt today, and LME copper will trade between $9,700-9,800/mt. Spot premiums are likely to move between 160-280 yuan/mt.
Aluminium: LME aluminium opened at $2,986/mt last night and closed at $3,000/mt, an increase of $13/mt or 0.44%.
During the night session, the most-traded SHFE aluminium contract opened at 21.060 yuan/mt, with the highest and lowest prices at 21,185 yuan/mt and 21,015 yuan/mt before closing at 21,075 yuan/mt, up 5 yuan/mt or 0.02%.
On the supply side, the operating aluminium capacity in Yunnan and Shanxi is expected to rise slightly. On the demand side, the downstream operating rates dropped approaching the Chinse New Year. And the market shall watch the risk aversion sentiment as well as the energy shortage in the Europe.
Lead: LME lead prices dipped 0.91% and closed at $2,353/mt overnight. The most-active SHFE 2203 lead contract decreased 0.32% to settle at 15,635 yuan/mt last night. The open interest added 2,774 lots to 47,921 lots.
Zinc: The overnight LME zinc closed at $3,512/mt, a decrease of $23.5/mt or 0.66%. The open interest added 4,478 lots to 261,000 lots. LME zinc inventory decreased by 2,225 mt to 181,450 mt. The US dollar index remained high above 86, which will put pressure on zinc prices. The European energy issues will still underpin LME zinc. LME zinc is expected to move between $3,500-3,550/mt today.
The most-traded SHFE zinc is expected to move between 24,200-24,700 yuan/mt today, and the domestic Shuangyan 0# zinc will be in premiums of 200-240 yuan/mt over SHFE 2202. Some smelters controlled their production amid pressures from the ore side, other than production suspension or cuts from environmental protection requirements. Some smelters in Hunan conducted maintenance which lasts longer than usual. The output in January is estimated at 513,400 mt, down greatly from the previous estimate.
Tin: On the fundamentals, the spot shipments and domestic warrants remained largely unchanged, and the goods from delivered SHFE 2201 contract will flow into the market. In terms of chart movement, the overnight SHFE 2202 touched a high of 314,000 yuan/mt, and then pulled back and remained congested. The open interest dropped slightly. The market supplies will be stable as a whole ahead of the Chinese New Year, but the market shall watch the market consumption capacity of the goods of delivered SHFE 2201.
Nickel: The SHFE 2202 nickel contract closed at 162,680 yuan/mt last evening, down 110 yuan/mt or 0.07% from the previous trading day. Trading volume decreased by 238,000 lots to 168,000 lots. Open interest decreased by 12,000 lots to 132,000 lots. The overall market activity declined yesterday. The market concerns over spot supply tightness eased. The fundamentals are unlikely to remain strong but the nickel prices will move rangebound in a wide range without immediate incentive to send the prices down.
