SHANGHAI, Jan 19 (SMM) – Shanghai base metals closed mixed overnight amid stronger expectations of early interest hikes. Their counterparts on LME performed similarly.
LME copper fell 0.82%, aluminium rose 0.67%, lead dropped 1.53%, and zinc increased 1.12%.
SHFE copper dropped 0.23%, aluminium rose 1.25%, lead decreased 1.53%, zinc went up, and nickel dropped 1,010 yuan/mt.
Copper: Three-month LME copper opened at $9,663/mt on Tuesday, hitting the highest point at $,9748/mt before falling to the lowest point at $9,630/mt, and closed at $9,676.5/mt, down 0.82%. The trading volume was 12,000 lots, and the open interest reached 245,000 lots. Three-month LME copper is expected to trade between $9,620-9,720/mt today,
The SHFE 2203 copper contract opened at 69,880 yuan/mt last night and fell 0.23% to close at 69,850 yuan/mt. SHFE copper is expected to trade between 69,600-70,200 yuan/mt today, with spot premiums between 280-480 yuan/mt.
On the macro front, investors has turned their attention to next week’s Fed meeting, which may suggest that the Fed will raise the interest rates in March. Amid such expectation, the dollar index rose for the third consecutive day, hitting a record high and marking the longest streak of gains since November 2021. Copper futures were dragged down. The spot prices fell slightly on the first trading day after the delivery, while the goods holders held firm to the prices. The intraday premiums edged down as the quotations were too high in the morning. The overall supply remained tight in the market. If the spot prices remain rangebound, the premiums are expected to stand firm.
Aluminium: LME aluminium opened at $2,995/mt on Tuesday and closed at $3,020/mt, an increase of $20/mt or 0.67%.
Overnight, the most-traded SHFE aluminium contract opened at 21,215 yuan/mt, with the highest and lowest prices at 21,535 yuan/mt and 21,200 yuan/mt before closing at 21,420 yuan/mt, up 265 yuan/mt or 1.25%.
On the domestic supply side, although the production of aluminium in Yunnan and Shanxi increased, the overall output remained relatively low. In terms of demand, consumption has weakened as the Spring Festival approaches, and stocks began to grow in some areas. It is still necessary to be alert to possible exit of bulls before the Spring Festival and the energy shortage in Europe.
Lead: Three-month LME lead opened at $2,357/mt on Tuesday and fell 1.53% to close at $2,317/mt.
The most-liquid SHFE 2203 lead contract opened at 15,685 yuan/mt last night and decreased 0.96% to settle at 15,525 yuan/mt, with open interest decreasing 1,259 lots to 47,777 lots.
Zinc: LME zinc opened at $3,512/mt on Tuesday, and closed at $3,551/mt, up $39.5/mt or 1.12%. Open interest decreased by 5,362 lots to 256,000 lots. LME zinc inventory decreased by 1,550 mt to 179,959 mt. Bullish sentiment in crude oil and thermal coal markets supported LME zinc. LME zinc is expected to move between $3,540-3,590/mt on Wednesday.
SHFE zinc rose overnight, and found support at the middle of the Bollinger Bands. Supply and demand remain weak. According to the press conference of the National Development and Reform Commission, construction of major projects will start in the first quarter, which will boost market sentiment and drive prices upward. On the whole, the price of zinc may fluctuate strongly. SHFE zinc is expected to move between 24,700-25,200 yuan/mt on Wednesday. 0# domestic Shuangyan zinc may trade at premiums of 190-240 yuan/mt over the SHFE 2202 zinc contract.
Nickel: SHFE 2202 nickel contract opened at 163,210 yuan/mt in the overnight trading and closed at 162,380 yuan/mt, down 1,010 yuan/mt. The trading volume was 176,000 lots, and the open interest dropped 8,000 lots to 124,000 lots.
The nickel stocks across LME-listed warehouses continued to drop, but the domestic arrivals stood low. The domestic supply and demand of pure nickel remained weak. The NPI prices pulled back from the peak, and the nickel sulphate prices lacked upward momentum approaching the CNY. The downstream were less willing to accept the prices. As such, the discount of NPI over NORNICKEL was higher than 25,000 yuan/mt, and the mainstream transaction prices of nickel sulphate were at premiums of only 4,000 yuan/mt over the nickel briquette. The premiums of NPI and nickel sulphate are unreasonable. If the spot prices continue to stagnate, the nickel prices may be dragged down. But the nickel prices may fall more slowly if there is news stimulus. The SHFE nickel is expected to move downward in the short term but remain in rangebound. SMM will monitor the support at 160,000 yuan/mt.
Tin: The SHFE 2202 tin contract moved rangebound overnight. Quotations in the spot market remained scarce, and higher prices led to sluggish trades. Investors began to roll their positions onto the 2203 contract. Tin prices may stabilise as consumption declines with the closures of downstream companies for the Spring Festival. However, the inflows of deliverable brands cargoes may impact the prices.
