SMM Evening Comments (Apr 27): Shanghai Nonferrous Metals Mostly Closed with Gains amid Easing COVID Situation in Shanghai

SHANGHAI, Apr 27 (SMM) – Shanghai nonferrous metals mostly closed with gains as the COVID situation in Shanghai seems to have reached its pivot with asymptomatic infected persons of COVID-19 in the city falling greatly from a day ago. Nonetheless, capitals are withdrawing from the market in light of upcoming Labour Day holiday.

Shanghai copper rose 0.3%, aluminium added 0.51%, lead dropped 0.61%, zinc gained 0.84%, tin jumped 2.95%, and nickel advanced 5.52%.

Copper: The most-traded SHFE 2206 copper closed up 0.3% or 220 yuan/mt at 73,320 yuan/mt, with open interest down 524 lots to 148,335 lots.

The downstream was revived slightly as the COVID situation in Shanghai seems to have reached its pivot, and the downstream restocked actively when copper prices dropped from absolute high. The shipments are now arriving in east and south China, containing regional premiums.

Aluminium: The most-traded SHFE 2206 aluminium closed up 0.51% or 105 yuan/mt to 20,765 yuan/mt, with open interest down 187 lots to 210,972 lots.

The spot premiums in Gongyi were still high, and the transactions were active. SHFE aluminium gained strong support at 20,000 yuan/mt after rapid declines. Nonetheless, the capitals are likely to leave the market for risk aversion approaching the Labour Day holiday. And the strength of longs need more evidences.

Lead: The most-traded SHFE 2206 lead closed down 0.61% or 95 yuan/mt at 15,495 yuan/mt, with open interest down 905 lots to 54,902 lots.

The raw materials and finished product transportation cost of primary and secondary lead rose as a whole due to the COVID breakout and uncertainties on local pandemic control measures. The downstream players mostly purchased from surrounding markets, which offered support to regional prices. However, the downstream became more cautious after lead prices fell this week, and stood wait-and-see.

Zinc: The most-traded SHFE 2206 zinc closed up 0.84% or 230 yuan/mt at 27,590 yuan/mt, with open interest down 4,891 lots to 121,978 lots.

Capitals are leaving the market amid the upcoming Labour Day holiday, reducing open interest. And the market is also returning to rationality. On the supply side, falling SHFE zinc expanded import losses, and ore supply shortage remained. In the spot market, export profit/loss narrowed by 900 yuan/mt from a day ago.

Tin: The most-traded SHFE 2206 tin closed up 2.95% or 9,480 yuan/mt at 331,100 yuan/mt, with open interest up 3,759 lots to 29,538 lots.

In the spot market, the offers by smelters and traders both rose 250 yuan/mt from a day ago to 337,500 yuan/mt. However, it is reported by some sellers that the actual transactions were less cheering, which might be a result of active restocking of downstream companies when tin prices dropped significantly earlier. SHFE warrants added 20 mt to 1,450 mt, putting an end to the drops for two consecutive days.

Nickel: The most-traded SHFE 2205 nickel closed up 5.52% or 12,000 yuan/mt at 229,540 yuan/mt, with open interest down 8,768 lots to 21,515 lots.

Pure nickel supply shortage remains as the growth engine for SHFE nickel. According to SMM, the social inventory of nickel has not recorded significant accumulation amid low operating rates and great import losses. And low LME and SHFE nickel inventory both underpinned nickel prices. On the demand side, the consumption was sluggish on high nickel prices and restricted transportation. Spot premiums have also been stable recently.

[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.]