SMM Evening Comments (Apr 12): Shanghai Nonferrous Metals Closed Mixed on Better Economic Results Released Today

SHANGHAI, Apr 12 (SMM) – Shanghai nonferrous metals closed mixed on the combination of better economic results, which all topped expectations, released today and lingering pandemic.

Shanghai copper lost 0.07%, aluminium dipped 1.22%, lead dropped 0.55%, zinc rose 1.75%, tin added 0.26%, and nickel was flat.

Copper: The most-traded SHFE 2205 copper closed down 0.07% or 50 yuan/mt at 73,350 yuan/mt, with open interest down 2,358 lots to 151,281 lots.

On the macro front, China's March financial data exceeded market expectations. China's social financing increased by 4.65 trillion yuan in March, 1.28 trillion yuan more than a year earlier; the cumulative increase in social financing scale in the first quarter was 12.06 trillion yuan, a record high for a single quarter and 1.77 trillion yuan more than a year earlier; growth of M2 money supply accelerated to 9.7% year-on-year in March, while M1 growth was flat at 4.7%; net cash injection in the first quarter was 431.7 billion yuan. Loans increased by 3.13 trillion yuan in March, an increase of R395.1 billion yuan year-on-year; RMB loans increased by 8.34 trillion yuan in the first quarter, a record high since records began, with an increase of RMB 663.6 billion yuan year-on-year. In March, the national CPI rose 1.5% year-on-year, or 0.6 percentage point more than the previous month; MoM growth was flat in March, down from 0.6% MoM growth in February. March PPI rose 1.1% MoM, or 0.6 percentage point more than the previous month; PPI rose 8.3% year-on-year, or 0.5 percentage points less than the previous month.

In the spot market, SMM copper stocks in mainstream markets decreased by 5,000 mt to 135,300 mt from last Friday, falling for six consecutive weeks on Monday. All parts of the country have been affected by the recent pandemic, with traffic controls of varying degrees. On the consumption side, east China is still under pandemic control and many companies are now starting to suspend the production as the market awaits for the recovery of the east China market.

Overseas, as of April 11, LME copper stocks accumulated significantly to 105,600 mt, a 42.3% month-on-month increase.

Aluminium: The most-traded SHFE 2205 aluminium closed down 1.22% or 260 yuan/mt to 21,070 yuan/mt, with open interest down 5,320 lots to 184,396 lots.

Downstream operating rates kept falling owing to the pandemic. Social inventory dropped on Monday mainly because less inflows, hence it is expected that the inventory will rise substantially in the short term. Aluminium prices are expected to be pressured.

Today, the confirmed COVID cases in Shanghai dropped from a day ago, and the government expressed that it was prohibited to close highways without approval. The pandemic in China may reach the turning point in the near term.

Lead: The most-traded SHFE 2205 lead closed down 0.55% or 85 yuan/mt at 15,370 yuan/mt, with open interest down 962 lots to 46,269 lots.

Intraday SMM #1 lead prices dropped slightly, and some smelters held firm to the prices, and spot prices were in small premiums. Market players were cautious amid low inventory. The downstream was more active compared with yesterday, and purchased on rigid demand.

Zinc: The most-traded SHFE 2205 zinc closed up 1.75% or 480 yuan/mt at 27,870 yuan/mt, with open interest up 10,000 lots to 124,099 lots.

On the supply side, the pandemic aggravated the labour shortage. Noranda Income Fund announced to lower the refined zinc output target in 2022. On the consumption side, zinc prices soared, and market quotes varied greatly. The traders were mostly wait-and-see, resulting in weaker transactions.

Tin: The most-traded SHFE 2205 tin closed up 0.26% or 880 yuan/mt at 339,830 yuan/mt, with open interest up 172 lots to 26,346 lots.

In the spot market, the spot market was poorer than expected. According to downstream companies in the Yangtze River Delta, the transportation of refined tin from Guangdong required longer time, hence the delivery of orders cannot be guaranteed in terms of time point, resulting in the loss of some orders. SHFE warrants inventory rose 1,196 mt to 3,030 mt, an increase of 65%, indicting sufficient supply of deliverable brands in the market. LME tin inventory added 5 mt to 2,765 mt.

Nickel: The most-traded SHFE 2205 nickel closed up 0.03% or 70 yuan/mt at 212,620 yuan/mt, with open interest down 7,785 lots to 49,127 lots.

The pandemic broke out in Foshan yesterday, which attracted market attention, and aggravated market concerns for nickel demand. On the fundamentals of nickel, the market dropped both in supply and demand in April. The import window of pure nickel remained closed, and transport restrictions due to pandemic deteriorated the supply side. Many primary nickel salt plants voluntarily reduced the production for operation losses as a result of surging LME prices before. The production and imports of NPI were relatively stable. On the demand side, a number of precursor plants reduced their production plans for rising raw materials.

[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.]