SMM Evening Comments (Apr 11): Shanghai Nonferrous Metals Closed Mixed as Market Concerns More about Pandemic with Waning Impact from International Situation

SHANGHAI, Apr 11 (SMM) – Shanghai nonferrous metals closed mixed as the market is constantly troubled by the pandemic situation, while the current international complexity has a weaker impact on the domestic market.  

Shanghai copper lost 0.39%, aluminium dipped 3.62%, lead dropped 0.74%, zinc rose 0.68%, tin added 0.21%, and nickel shed 2.95%.

Copper: The most-traded SHFE 2205 copper closed down 0.39% or 290 yuan/mt at 73,230 yuan/mt, with open interest down 5,085 lots to 153,639 lots.

Market transactions were still weak Monday amid the still spreading COVID in east China and occasional cases in south China. Spot premiums surged despite a quiet market, which was a great shock to the industry chain.

As of Monday April 11, SMM copper inventory across major Chinese markets fell 5,000 mt from last Friday to 135,300 mt. The inventory dropped on Mondays for six consecutive weeks.

Aluminium: The most-traded SHFE 2205 aluminium closed down 3.62% or 790 yuan/mt to 21,005 yuan/mt, with open interest up 3,300 lots to 189,716 lots.

In the short term, domestic COVID-19 pandemic situation was still severe, and the transportation has not yet returned to normal despite some improvement. Downstream operating rates kept falling, and international situation was still challenged by conflicts, but the domestic market is less impacted.

Lead: The most-traded SHFE 2205 lead closed down 0.74% or 115 yuan/mt at 15,385 yuan/mt, with open interest down 612 lots to 47,231 lots.

Operating rates of lead-acid battery dropped, and spots were in wide discounts over futures prices approaching the delivery of SHFE 2204 lead. And it is expected that the social inventory will keep rising.

SMM lead ingot social inventory totalled 101,200 mt as of April 11, up 1,300 mt from last Friday (April 1), and up 1,800 mt from last Wednesday (April 6). According to the survey, both supply and demand of lead ingot declined due to the continuous impact of the pandemic on the lead industry chain, especially in the consumer sector.

Zinc: The most-traded SHFE 2205 zinc closed up 0.68% or 185 yuan/mt at 27,240 yuan/mt, with open interest up 4,898 lots to 114,099 lots.

On the consumption, zinc prices were high due to spreading pandemic, and some downstream companies were wait-and-see, subsiding market transactions. In the spot market, the social inventory across seven market totalled 280,400 mt as of today April 11, up slightly from Friday April 8, which has been rising slightly since late March. LME inventory kept falling, and cancelled warrants rose steeply, and market shall watch overseas short squeeze.

Tin: The most-traded SHFE 2205 tin closed up 0.21% or 720 yuan/mt at 337,360 yuan/mt, with open interest down 2,116 lots to 26,174 lots.

In the spot market, shipments were relatively stable, so were transactions. SHFE warrants inventory dropped 122 mt to 1,834 mt, a low after Chinese New Year. The market shall watch the cancelled warrants.

Nickel: The most-traded SHFE 2205 nickel closed down 2.95% or 6,420 yuan/mt at 210,900 yuan/mt, with open interest up 7,503 lots to 56,912 lots.

SMM domestic refined nickel output dropped in March due to the pandemic and short supply of pure nickel caused by constant imports losses. On the demand side, the supply of nickel sulphate was relatively tight for lack of raw materials. The output of high-grade nickel matte is the key to determine the supply level in the new energy sector and eases nickel briquette supply shortage. Disappointingly, the output of nickel matte has not met the expectation.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]