SHANGHAI, Jan 28 (SMM) – Most of the base metals prices ended lower last night as the US dollar strengthened.
LME copper dipped 1.82%, aluminium rose 0.02%, lead slid 0.56%, and zinc rose 0.35%.
SHFE copper lost 0.26%, aluminium advanced 0.3%, lead dropped 0.62%, zinc rose 2.04%, and nickel dipped 0.65%.
Copper: LME copper prices dipped 1.82% overnight and closed at $9,725/mt. Trading volume was 14,000 lots and open interest stood at 245,000 lots. The SHFE 2203 copper contract lost 0.26% to close at 70,330 yuan/mt last night. Trading volume was 34,000 lots and open interest stood at 129,000 lots. On the macro front, the U.S. fourth-quarter GDP data released yesterday far exceeded the previous value and expectations, and the U.S. GDP in 2021 achieved the best performance in nearly four decades, raising the market’s expectations that the Federal Reserve may accelerate interest rate hikes. The dollar recorded four consecutive gains overnight, and copper futures fell under pressure. As for the spot market, more market participants halted operations as the CNY holidays nears. The spot trades were quiet. Today is the last trading day of ahead of CNY, and as the actual buying will be more sluggish. It is expected that LME copper will run at $9,650-9,750/mt today, and SHFE copper will run at 70,100-70,700 yuan/mt, with the spot copper quoted with discounts of 30 yuan/mt to premiums of 80 yuan/mt.
Aluminium: Overnight, the most-traded SHFE 2203 aluminium contract opened at 21,515 yuan/mt, with the highest and lowest prices at 21,780 yuan/mt and 21,480 yuan/mt before closing at 21,575 yuan/mt, up 65 yuan/mt or 0.3%.
LME aluminium opened at $3,093/mt on Thursday and closed at $3,100.5/mt, an increase of $0.5/mt or 0.02%.
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. 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. In the short term, SHFE aluminium will remain at a high level. It is still necessary to be alert to possible exit of bulls before the Spring Festival and the changes in overseas supply and demand.
Lead: LME lead prices dipped 0.56% and closed at $2,315/mt overnight. The most-active SHFE 2203 lead contract shed 0.62% to close at 15,315 yuan/mt in the overnight trading yesterday.
Zinc: LME zinc fell to $3,563/mt after opening at $3,608/mt on Thursday, but then returned to above $3,600/mt. Later, LME zinc rose to $3,659.5/mt before closing at $3,635.5/mt, up $12.5/mt or 0.35%. Trading volume rose to 9,446 lots, and open interest decreased by 1,128 lots to 252,000 lots. LME zinc remained between the middle and the upper end of the Bollinger Band. LME zinc is expected to move between $3,580-3,630/mt on Friday.
Overnight, the most-traded SHFE 2203 zinc contract opened at 25,010 yuan/mt and hita high of 25,370 yuan/mt before falling back to 25,200 yuan/mt, and closed at 25,305 yuan/mt, up 505 yuan/mt or 2.04%. Trading volume rose to 152,000 lots, and open interest increased by 1,402 lots to 245,800 lots. On the supply side, SMM estimates that China produced 521,000 mt of refined zinc in January, an increase of 7,700 mt from the previous month, and the production in February is expected to be 487,700 mt, an increase of 3.5% year-on-year, both higher than expected. On the demand side, the domestic downstream producers have basically closed for the Spring Festival, and the market demand fell sharply. The consumption before the Spring Festival this year was not as good as last year. Traders in the spot market also suspended business for the Spring Festival. Overall, the domestic supply is in a state of seasonal surplus, while overseas inventories continue to decline. In addition, there has been no news of resumption of production at overseas smelters. It is expected that short-term zinc prices will move in a wide range. The most-traded SHFE zinc contract is expected to move within a range of 24,800-25,300 yuan/mt today. 0# domestic Shuangyan zinc may trade at premiums of 60-80 yuan/mt over the SHFE 2202 zinc contract.
Tin: Overnight, the SHFE 2203 tin contract fell before rising. The inventory of SHFE warrants changed little, and the spot market was quiet as the Spring Festival is just few days away. Capital flowed out of the SHFE tin market due to pre-holiday risk aversion. SHFE tin will trade sideways before the holiday.
Nickel: SHFE nickel contract shed 1,070 yuan/mt or 0.65% to end at 164,800 yuan/mt in the overnight trading. Trading volumes stood at 123,000 lots and open interest decreased 13,041 lots to 129,050 lots. Today is the last trading day before the CNY holidays, and there is no night trading in the evening. It is expected that the nickel prices will remain rangebound today.
