SMM Evening Comments (Jan 4): Shanghai Nonferrous Metals Closed Mostly with Losses amid Sluggish Demand

SHANGHAI, Jan 4 (SMM) – Shanghai nonferrous metals closed mostly with losses. On the macro front, the US Fed will release the December monetary meeting minutes in the early morning of January 5. US dollar index has been rebounding recently, weighing on risk asset prices. The demand in China lacks momentum in the near term as the Chinese New Year begins earlier than in previous years.

Shanghai copper lost 1.69%, aluminium fell 2.54%, lead slid 0.85%, zinc shed 1.35%, tin dropped 0.25%, and nickel rose 1.01%.

Copper: The most-traded SHFE 2302 copper closed down 1.69% or 1,110 yuan/mt at 64,560 yuan/mt, with open interest up 2,637 lots to 99,483 lots.

The spot premiums fell below 100 yuan/mt today, signalling insufficient downstream demand, which also weighed on SHFE copper. The contract is likely to post strong performance seen before the New Year’s Day this week.

Aluminium: The most-traded SHFE 2302 aluminium closed down 2.54% or 465 yuan/mt at 17,865 yuan/mt, with open interest up 12,967 lots to 166,369 lots.

The power rationing in south-west China dragged down the domestic operating aluminium capacity. Once downstream enterprises resume their production, regional supply shortages will occur in the first quarter. However, the short-term aluminium prices will face downward pressure to falling domestic and overseas demand, inventory accumulation, as well as weaker cost support. Downstream operating rates fell in the off-season, and spot market was muted.

Lead: The most-traded SHFE 2302 lead closed down 0.85% or 135 yuan/mt at 15,765 yuan/mt, with open interest down 2,789 lots to 65,041 lots.

The shipment situation of cargo holders diverged greatly. Most of them suspended making quotes and delivered their cargoes to SHFE warehouses, while some were active in making shipments before the logistics services are halted and lowed the discounts. Downstream players still had rigid demand, while some purchased on dips. The spot market did not improve significantly.

Zinc: The most-traded SHFE 2302 zinc closed down 1.35% or 315 yuan/mt at 23,105 yuan/mt, with open interest up 3,746 lots to 89,803 lots.

The south region of China ushered in the peak of covid infection, leading to insufficient labour forces. Coupled with the approaching Chinese New Year, more downstream players were closed for holiday. SMM zinc ingot social inventory across seven markets in China rose during New Year’s Day holiday, offering less support to SHFE zinc.

Tin: The most-traded SHFE 2302 tin closed down 0.25% or 520 yuan/mt at 207,610 yuan/mt, with open interest up 5,391 lots to 48,779 lots.

In the spot market, downstream demand picked up slightly after SHFE tin prices fell. SHFE warrants inventory added 138 mt to 4,902 mt today.

Nickel: The most-traded SHFE 2302 nickel closed up 1.01% or 2,290 yuan/mt at 229,420 yuan/mt, with open interest up 964 lots to 72,586 lots.

In the spot market, Jinchuan nickel was in premiums of 4,500-7,500 yuan/mt, with an average of 6,000 yuan/mt, down 2,650 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 6,500-7,000 yuan/mt, with an average of 6,750 yuan/mt, down 1,550 yuan/mt on a daily basis. The import losses of pure nickel expanded further due to surging LME nickel price, and the premiums of Jinchuan nickel fell below that of NORNICKEL nickel. For nickel briquette, the prices stood between 236,300-238,000 yuan/mt, up 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.]