SHANGHAI, Dec 23 (SMM) – Shanghai nonferrous metals closed mostly with losses on recession fears. On the macro front, the US employment and GDP readings were better than expected, indicating that the labour market is still strong, which may enable the US Fed to hold onto hawkish stance for a longer period of time. Therefore, the dollar index rebounded but insignificantly. The European Central Bank officials delivered another hawkish voice that the 50-basis-point interest rate hike may become the "new normal", and it worried that the market might have underestimated the sustainability of inflation.

Shanghai copper fell 0.82%, aluminium inched down 0.03%, lead gained 1.08%, zinc lost 1.05%, tin jumped 0.24%, and nickel slid 0.89%.

Copper: The most-traded SHFE 2301 copper closed down 0.82% or 540 yuan/mt at 65,450 yuan/mt, with open interest down 6,195 lots to 90,762 lots.

In the spot market, the premiums in Shanghai have been firm throughout this week, but the aggravating pandemic situation has weighed on the operating rates of some downstream fabricators. The downstream players were thus less interest in purchasing. In other words, the high premiums were enabled by falling supply rather than growing demand. Generally speaking, the disruptions on the supply side including the closed import window, delayed arrivals in Shanghai amid spreading covid, as well as the inactivity of traders also owing to the pandemic.

Aluminium: The most-traded SHFE 2301 aluminium closed down 0.03% or 5 yuan/mt at 18,680 yuan/mt, with open interest down 11,935 lots to 94,488 lots.

On the macro front, the global liquidity tightened. On the fundamentals, the supply side was still weighed on by the power rationing in south-west China, and the aluminium ingot in December is more than likely to fall short. In addition, the downstream processing industry has entered the seasonal low, featuring weak downstream consumption. On the backdrop of weak supply and demand, SHFE aluminium will be supported by low inventory that dropped further in the off-season. In the spot market, the premiums stood high on tight supply and traders refraining from selling.

Lead: The most-traded SHFE 2302 lead closed up 1.08% or 170 yuan/mt at 15,865 yuan/mt, with open interest up 8,179 lots to 66,869 lots.

The cargo holders shipped based on the market dynamics. The smelters quoted with larger discounts, while the downstream players purchased on demand, and some favoured sources from the smelters. The transactions in the spot market were muted.

Zinc: The most-traded SHFE 2302 zinc closed down 1.05% or 245 yuan/mt at 23,155 yuan/mt, with open interest up 5,385 lots to 86,458 lots.

The bearish sentiment on the macro front weighed on the contract performance, but the fundamentals in China is able to offer some support.

Tin: The most-traded SHFE 2301 tin closed up 0.24% or 470 yuan/mt at 196,550 yuan/mt, with open interest down 3,443 lots to 27,989 lots.

In the spot market, the smelters were cautious in making quotes in early trade, and some still held the prices firm. The premiums/discounts offered by the traders were stable, and the overall spot market was quiet in terms of shipments. The downstream players rarely purchased, and some bought imported in on dips.

Nickel: The most-traded SHFE 2302 nickel closed down 0.89% or 1,960 yuan/mt at 217,520 yuan/mt, with open interest down 4,396 lots to 71,583 lots.

In the spot market, Jinchuan nickel was in premiums of 11,000 yuan/mt, up 500 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 7,200-7,500 yuan/mt, with an average of 7,350 yuan/mt, down 250 yuan/mt on a daily basis. The supply tightness in the spot market improved slightly recently, and the spot premiums are likely to fall starting from next week. For nickel briquette, the prices stood between 222,400-223,800 yuan/mt, down 3,200 yuan/mt from a day ago.

[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.]