Shanghai Copper and Shanghai Aluminum hit one-week highs in anticipation of more stimulus measures

Published: Mar 17, 2022 18:24

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Shanghai Copper and Shanghai Aluminum hit one-week highs on March 17, Shanghai Copper and Shanghai Aluminum hit one-week highs on Thursday, boosted by hopes that China could take more stimulus measures and stronger risk appetite in Asian financial markets. Investors are also watching for signs of compromise and progress in the ongoing negotiations between Russia and Ukraine. Fears that conflicts in Eastern Europe and increasing sanctions against Russia will disrupt metal supplies and raise the cost of natural gas have pushed up metal prices.

On March 17, Shanghai Copper and Shanghai Aluminum hit one-week highs on Thursday, boosted by hopes that China could take more stimulus measures and stronger risk appetite in Asian financial markets.

The 2204 contract of Shanghai Copper closed up 0.8% at 72250 yuan per ton. Shanghai Aluminum rose 2.4% to 22200 yuan. Both metals hit their highest levels since March 9.

Copper for delivery in three months on the London Metal Exchange (LME) rose 0.89% to US $10143 a tonne at 1737 Beijing time.

Aluminum for three-month delivery rose 1.7 per cent to $3314 a tonne.

On March 16, the Financial Stability and Development Committee of the State Council of China held a special meeting to study the current economic situation and capital market issues. The meeting stressed that the relevant departments should earnestly assume their own responsibilities, actively introduce policies beneficial to the market, and prudently introduce contractionary policies. We should respond to the hot issues of market concern in a timely manner. All policies that have a significant impact on the capital market should be coordinated with the financial management department in advance to maintain the stability and consistency of policy expectations.

"everyone was encouraged by yesterday's meeting, and overall, the market is in a risky mode," said an analyst at a consultancy.

He also said supply conditions in China were expected to be better this year than last year as production restrictions were relaxed and demand looked stronger as investment grew, especially in infrastructure, which consumes large amounts of materials.

Investors are also watching for signs of compromise and progress in the ongoing negotiations between Russia and Ukraine.

Fears that conflicts in Eastern Europe and increasing sanctions against Russia will disrupt metal supplies and raise the cost of natural gas have pushed up metal prices.

LME nickel hit the 8 per cent limit at the start of trading on Thursday as traders sold off in anticipation of a fall in nickel prices. Nickel is a metal used to make stainless steel and electric car batteries.

LME issued a notice on Wednesday that it would increase the daily limit for nickel trading from 5 per cent to 8 per cent from Thursday, but it was still well below the 15 per cent limit for other metals such as copper, aluminium, zinc and lead.

Three-month nickel fell to $41945 a tonne on Thursday.

Due to a technical glitch, LME was forced to stop trading in nickel in its electronic system within a minute of opening on Wednesday, and trading volume was very small when trading resumed in the afternoon.

The US Federal Reserve / FED on Wednesday raised interest rates for the first time since 2018 and laid out an aggressive plan to push borrowing costs to restrictive levels next year, as concerns about high inflation and the war in Ukraine outweighed the risk of a novel coronavirus pandemic.

Among other metals, three-month lead rose 0.82 per cent to $2270 a tonne, zinc fell 0.75 per cent to $3780 a tonne, and tin fell 1.8 per cent to $41515 a tonne.

Shanghai lead rose 1.19 per cent to US $15275 per tonne, Shanghai zinc rose 0.94 per cent to US $25310 per tonne, Shanghai nickel fell 1.75 per cent to US $219440 per tonne, and Shanghai tin fell 0.48 per cent to US $327890 per tonne.

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