SMM Evening Comments (Apr 14): Shanghai Nonferrous Metals Mostly Closed Mixed on Extending Influences of COVID

SHANGHAI, Apr 14 (SMM) – Shanghai nonferrous metals closed mixed as the pandemic has not yet shown signs of improving.

Shanghai copper rose 0.35%, aluminium added 1.42%, lead fell 0.52%, zinc dropped 1.99%, tin jumped 1.61%, and nickel climbed 2.39%.

Copper: The most-traded SHFE 2205 copper closed up 0.35% or 260 yuan/mt at 74,180 yuan/mt, with open interest down 5 lots to 157,429 lots.

On the supply side, a number of smelters suspended the production for maintenance, and the shipments arriving at and leaving Shanghai both dropped for spreading COVID. The demand was also weak, as copper-related companies in Shanghai and surrounding areas were shut down due to the pandemic. The pandemic in Shanghai will largely determine the supply and demand situation in the future.

Aluminium: The most-traded SHFE 2205 aluminium closed up 1.42% or 300 yuan/mt to 21,440 yuan/mt, with open interest down 10,208 lots to 167,560 lots.

According to SMM statistics, the inventory rose on Monday as pandemic has influenced the transportation. Market bearishness has been fully digested, hence aluminium prices rose recently. The market shall keep watching how the pandemic influences the markets in east and south China.

Lead: The most-traded SHFE 2205 lead closed down 0.52% or 80 yuan/mt at 15,320 yuan/mt, with open interest up 3,850 lots to 47,250 lots.

Supply of spots were scarce in the market, and offers from the traders were relatively stable. Downstream demand was also sluggish, and only purchased on rigid demand.

Zinc: The most-traded SHFE 2205 zinc closed down 1.99% or 565 yuan/mt at 27,845 yuan/mt, with open interest down 9,545 lots to 117,871 lots.

On the supply side, SHFE/LME price ratio dropped to a low of 6.27, with imports losses as much as 6,031 yuan/mt, hence the import window remained closed for the ore side. On the consumption side, zinc prices dropped, and downstream companies purchased on dips. Die-casting zinc production was affected by high zinc prices, as 94% of the raw materials is zinc ingot, and resurging pandemic, and the sector’s average operating rate dropped 12.77 MoM. In the spot market, zinc prices fluctuated greatly as the delivery of SHFE contract is approaching, and traders held firm to the prices.

Tin: The most-traded SHFE 2205 tin closed up 1.61% or 5,380 yuan/mt at 339,240 yuan/mt, with open interest down 1,094 lots to 24,975 lots.

In the spot market, the offers from traders and smelters both rose along with futures prices by 3,500 yuan/mt, but spot premiums dropped nearly 4,000 yuan/mt from yesterday, and spot transactions were scarce. SHFE warrants dropped 28 mt to 2,922 mt. LME tin inventory fell 100 mt to 2,665 mt as of April 13.

Nickel: The most-traded SHFE 2205 nickel closed up 2.39% or 5,230 yuan/mt at 223,880 yuan/mt, with open interest down 4,986 lots to 51,210 lots.

Nickel industry chain saw weakness in both supply and demand. On the supply side, the pandemic situation in Shanghai has not yet eased, and domestic pure nickel remained tight on production cuts and import losses. The demand was weakened by the COVID, high nickel prices and fast transmission of high prices across the industry chain, hence the demand in the nickel sulphate sector dropped, and the profits of precursor plants have also been impacted. Weak demand pressures nickel prices, while supply tightness will underpin the metal.

[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.]