SHANGHAI, Jan 20 (SMM) – Shanghai Base Metals all closed with gains in the overnight trading. LME metals rose in the trading on Wednesday as well.
LME copper rose 1.49%, aluminium increased 1.09%, lead went up 1.77%, and zinc gained 1.08%.
SHFE copper rose 1.19%, aluminium gained 0.53%, lead won 1.77%, and nickel surged over 5%.
Copper: Three-month LME copper opened at $9,781/mt on Wednesday, hitting the highest level at $9,870/mt, and closed at 9,821/mt, up 1.49%. The trading volume was 11,000 lots, and the open interest was 240,000 lots. Three-month LME copper is expected to trade between $9,760-9,860/mt today.
The SHFE 2203 copper contract opened at 70,490 yuan/mt last night, hitting the highest and lowest points at 70,380 yuan/mt respectively, before closing at 70,830 yuan/mt, an increase of 1.19%. The trading volume was 49,000 lots, and the open interest was 142,000 lots. SHFE copper is expected to trade between 70,300-70,900 yuan/mt today, with spot premiums between 160-320 yuan/mt.
The crude oil transportation pipeline from Iraq to Turkey was temporarily interrupted due to fire, and the International Energy Agency raised its forecast for oil demand growth in 2022. International oil prices soared again yesterday, which boosted the copper prices. The falling US dollar also drove up the copper prices. The downstream purchases continued to be suppressed amid few orders approaching the Chinese New Year (CNY). The market transactions declined, and the goods holders held less firm to the premiums. The stalemate of the premiums and supply-demand structure may be broken.
Aluminium: LME aluminium opened at $3,012/mt on Wednesday and closed at $3,053/mt, an increase of $33/mt or 1.09%.
Overnight, the most-traded SHFE aluminium contract opened at 21,660 yuan/mt, with the highest and lowest prices at 21,820 yuan/mt and 21,505 yuan/mt before closing at 21,620 yuan/mt, up 115 yuan/mt or 0.53%.
On the 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. SHFE aluminium may fall before the Spring Festival due to growing inventory. Inventory increase during the Spring Festival this year may be smaller than in previous years, and the post-holiday inventory peak may be lower than 1.2 million mt.
Lead: Three-month LME lead opened at $2,327/mt on Wednesday and fluctuated around $2,330/mt. In the European session, the LME lead rebounded to $2,370/mt and closed at $2,358/mt, up 1.77%.
The most-liquid SHFE 2203 lead contract opened at 15,665 yuan/mt and gained 0.9% to settle at 15,685 yuan/mt last night, with open interest decreasing 3,898 lots to 50,328 lots.
Zinc: LME zinc opened at $3,554/mt on Wednesday, and fell to $3,550/mt, and then climbed to a new high of $3,607/mt. LME zinc closed at $3,590/mt, up $38.5/mt or 1.08%. Open interest decreased by 1,164 lots to 255,000 lots. LME zinc inventory decreased by 4425 mt to 175525 mt. Bullish sentiment in crude oil and thermal coal markets supported LME zinc. LME zinc is expected to move between $3,580-3,630/mt on Thursday.
Overnight, SHFE zinc hit a high of 25,210 yuan/mt, and stood at above all the daily moving averages, but met resistance at the upper end of the Bollinger Bands. In the spot market, higher zinc prices curbed downstream stocking, and sellers rushed to sell, which led to an accelerated decline in spot premiums. SHFE zinc is expected to move between 25,100-25,600 yuan/mt on Thursday. 0# domestic Shuangyan zinc may trade at premiums of 170-200 yuan/mt over the SHFE 2202 zinc contract.
Nickel: The SHFE 2202 nickel contract opened at 164,080 yuan/mt and rose over 5% to close at 171,490 yuan/mt as the longs increased their positions. The LME nickel also increased by nearly 5% to $23,230/mt. The fundamentals changed little. The overseas inventory kept falling and the spot supply remained tight. And the macro economy may not tighten significantly. China also wants to speed up the implementation of infrastructure investment projects to further stimulate the demand. Since the inventory of nickel stood low, the consumption is expected to grow, and the short supply cannot be completely alleviated in the short term, the investors tend to invest in other metals with less prominent contradictions. Therefore, the overall nickel prices are expected to be in an upward trend, but the prices may pull back amid poor demand.
Tin: The SHFE 2202 tin contract hit a new high overnight. Investors began to roll their positions onto the 2203 contract. The spot market was relatively stable. Whether tin prices will rise further depends on inventory changes after the holiday.
