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SMM Evening Comments (May 26): Shanghai Nonferrous Metals Closed Mixed with Disturbances from Inflation and Rate Hike

iconMay 26, 2022 19:00
Source:SMM
Shanghai nonferrous metals closed mixed today with disturbances from persistent inflation and corresponding rate hike to curb the inflation. The sluggish domestic demand also shadowed the market.

SHANGHAI, May 26 (SMM) – Shanghai nonferrous metals closed mixed today with disturbances from persistent inflation and corresponding rate hike to curb the inflation. The sluggish domestic demand also shadowed the market.

Shanghai copper declined 0.49%, aluminium rose 0.32%, lead shed 1.69%, zinc slid 0.57%, tin dropped 5.65%, and nickel added 0.08%.

Copper: The most-traded SHFE 2207 copper closed down 0.49% or 350 yuan/mt at 71,080 yuan/mt, with open interest up 9,750 lots to 131,511 lots.

According to the Fed’s latest monetary meeting minutes, all participants supported a 50-basis-point rate hike to fight the inflation, which is in line with market expectations. In China, the central government once again held a video meeting to highlight of importance of stable economic growth.

The downstream demand now remains the focus of market participants. Currently speaking, downstream operating rates have been rising on easing pandemic situation, but the terminal orders have not improved substantially.

Aluminium: The most-traded SHFE 2207 aluminium closed up 0.32% or 65 yuan/mt to 20,500 yuan/mt, with open interest up 3,958 lots to 171,634 lots.

Aluminium market is still featured by weak fundamentals, as the supply grows more slowly while the demand remains relatively poor. The constantly falling aluminium inventory may provide some support. According to SMM statistics, the aluminium ingot social inventories across China’s eight major markets totalled 936,000 mt as of May 26, down 29,000 mt from a week ago and 50,000 mt from the end of April. The inventories of aluminium billets in China’s major markets dropped by 6,300 mt on a weekly basis as of May 26

Lead: The most-traded SHFE 2207 lead closed down 1.69% or 255 yuan/mt at 14,800 yuan/mt, with open interest up 5,237 lots to 67,012 lots.

In the spot market, lead supply is likely to pick up, but the consumption remained poor, leading to sluggish transactions. The market shall watch the change of lead ingot social inventory as well as the recovery of downstream demand.

Zinc: The most-traded SHFE 2207 zinc closed down 0.57% or 145 yuan/mt at 25,390 yuan/mt, with open interest up 4,129 lots to 103,282 lots.

Zinc futures prices dropped today, which was mainly dragged on by muted domestic consumption. Nonetheless, domestic zinc sector has performed relatively sound recently, and the launching of some regular national projects boosted the market to some extent. But the die-casting zinc alloy sector is extremely poor. Zinc prices have been contained by the consumption side.

Tin: The most-traded SHFE 2206 tin closed down 5.65% or 15,360 yuan/mt at 256,260 yuan/mt, with open interest up 426 lots to 26,371 lots.

In the spot market, there were few quotations from upstream sellers, and the offers were 259,000 yuan/mt on average, down 14,500 yuan/mt from yesterday. Some sellers lowered their offers further along with falling futures prices. However, the performance of the futures contracts made downstream buyers even more wait-and-see, hence the transactions were poor. SHFE warrants rose 62 mt to 1,772 mt, while LME tin inventory dropped 155 mt to 3,035 mt as of May 25. The import losses based on SHFE 2206 and 2207 contracts were 5,624.29 yuan/mt and 13,086.22 yuan/mt respectively.

Nickel: The most-traded SHFE 2206 nickel closed up 0.08% or 170 yuan/mt at 203,970 yuan/mt, with open interest down 7,393 lots to 35,965 lots.

On the supply side, the customs clearance volume of pure nickel is expected to rise this week with constantly import profits. The prices of nickel sulphate dropped along with falling raw material prices, but some manufacturers that suspended the production for profit issues are resuming the production. Nonetheless, the output growth will be limited due to falling finished products prices. In terms of NPI, the commissioning progress of Delong in Indonesia accelerated.

On the demand side, some steel mills may start mid-year maintenance in June, hence the output is likely to rise significantly in the month compared with May. Alloy mills generated little demand as their restocking activities have completed last week.

[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.]

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