SMM Evening Comments (Feb 24): Shanghai Nonferrous Metals Closed Mixed on A Quiet Spot Market

Published: Feb 24, 2022 19:00
Shanghai nonferrous metals closed mixed. The escalating Russia-Ukraine conflicts dented the market, and the quiet spot market also kept the market participants cautious.

SHANGHAI, Feb 24 (SMM) – Shanghai nonferrous metals closed mixed. The escalating Russia-Ukraine conflicts dented the market, and the quiet spot market also kept the market participants cautious.  

Shanghai copper fell 0.52%, aluminium added 0.26%, lead was flat, zinc lost 1.55%, tin rose 1.85%, and nickel jumped 1.23%.

Copper: The most-traded SHFE 2204 copper closed down 0.52% or 370 yuan/mt at 70970 yuan/mt, with open interest up 2590 lots to 131418 lots.

Copper prices dropped in morning trade amid uncertainties on the macro front and seasonal growth of domestic copper inventory. SHFE copper contract retrieved some of the losses in the afternoon as geopolitical risks disturbed overseas supply, and surging oil prices also pulled up the energy and chemical board.

LME copper inventory remained stable around 74,000 mt. Domestic inventory was still at a low level, but SHFE copper inventory has risen drastically post the Chinese New Year holiday amid slow recovery in copper demand. Nonetheless, the growth of social inventory slowed with the recovery of downstream processing industry.

Aluminium: The most-traded SHFE 2204 aluminium closed up 0.26% or 60 yuan/mt to 22950 yuan/mt, with open interest up 12291 lots to 232269 lots.

LME 3M aluminium opened at $3,288/mt, and started to rise after a short congestion. The contract later climbed drastically after the Russia-Ukraine conflicts escalated to a new level, and closed the day at $3,404/mt, a gain of $111/mt or 3.37%.

On the whole, SHFE aluminium recorded a brief increase in afternoon trading after the news that Russia and Ukraine started the war rampaged the market. Nonetheless, the SHFE aluminium still underperformed its counterpart at LME.

Lead: The most-traded SHFE 2204 lead closed down 0.06% or 10 yuan/mt at 15540 yuan/mt, with open interest down 25 lots to 54958 lots.

In the spot market, primary lead smelters narrowed their discounts slightly, but the absolute traded prices of spots were almost flat from a day ago. Secondary refined lead smelters made shipments on market demand, and the offers were mainly in discounts of 250-325 yuan/mt over SMM #1 lead, and the quotes dropped slightly with the falling lead prices.

The orders placed by downstream companies diverged as they differed on the bullishness and bearishness concerning the market outlook. The transactions under warrants were low. The lead brands of Chihong and Tongguan in Shanghai were offered between 15,410-15,430 yuan/mt, or in discounts of 20-0 yuan/mt over SHFE 2203. Lead brands of Jijin, Jiangtong, Tongguan and Mulun in Zhejiang and Jiangsu were offered between 15430-15450 yuan/mt or in premiums of 0-20 yuan/mt over SHFE 2203. The spot market was relatively sluggish.   

Zinc: The most-traded SHFE 2204 zinc closed down 1.55% or 390 yuan/mt at 24740 yuan/mt, with open interest up 12161 lots to 132944 lots.

Energy crisis in Europe intensified amid the escalating Russia-Ukraine tensions, and global stocks market slumped and crude oil prices surged. The market shall watch the market risks on the back of changing international situation.

The trade market was quiet. Domestic inventory kept rising, and is expected to fall quickly if the demand side picks up.

Tin: The most-traded SHFE 2205 tin closed up 1.85% or 6160 yuan/mt at 338500 yuan/mt, with open interest up 10755 lots to 34594 lots.

In the spot market, the upstream quotes once again stood above 340,000 yuan/mt, with an average of 340,500 yuan/mt. However, the downstream was still hesitant in light of the high prices, and mainly purchased on rigid demand. SHFE warrants rose 6 mt to 2,811 mt.

Nickel: The most-traded SHFE 2204 nickel closed up 1.23% or 2180 yuan/mt to 179540 yuan/mt, with open interest up 15574 lots to 153099 lots.

On the fundamentals, LME nickel inventory kept falling, and the comparatively tight supply is among the significant reasons that underpinned nickel prices. Meanwhile, LME swap costs were high, indicating market worries over nickel supply in the future.

In the spot market, Jinchuan nickel was in premiums of 1,850 yuan/mt over SHFE 2203, while NORNICKEL nickel was in premiums of 1,050 yuan/mt over SHFE 2203. And the transactions were thin. In terms of nickel briquette, the supply was still tight, with premiums of 2,000-2,200 yuan/mt over SHFE 2203. There were hardly any transactions in the market as the absolute prices were still high compared with the previous session.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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