SMM Evening Comments (Jan 6): Shanghai Nonferrous Metals Closed Mixed

SHANGHAI, Jan 6 (SMM) – Shanghai nonferrous metals closed mixed. On the macro front, the US December ADP private employment rose 235,000, far exceeding expectations, alluding a tight labour market. The dollar index rebounded sharply as a resulting. US Fed official Bullard said interest rates are close to restrictive levels, and did not reiterate last year's super hawkish rhetoric.

Shanghai copper gained 1.76%, aluminium rose 0.28%, lead slid 0.45%, zinc added 0.5%, tin dropped 0.37%, and nickel declined 6.05%.

Copper: The most-traded SHFE 2302 copper closed up 1.76 % or 1,130 yuan/mt at 65,240 yuan/mt, with open interest down 4,382 lots to 93,974 lots.

SHFE copper price rebounded today amid support from both the fundamentals. In the spot market, the unexpectedly rising SHFE copper price contained downstream restocking demand, and the market transactions were lacklustre.

Aluminium: The most-traded SHFE 2302 aluminium closed up 0.28% or 50 yuan/mt at 17,850 yuan/mt, with open interest down 748 lots to 171,471 lots.

The impact of power rationing in south-west China continued to expand. Guizhou Province is about to impose a third round of power rationing on local aluminum smelters due to high electricity consumption during the heating season. This will further drag down the domestic operating aluminum capacity and ease oversupply pressure in south-west China. On the demand side, downstream consumption is still in the off-season. With the Chinese New Year drawing near, the operating rates of aluminum downstream enterprises declined. Trades in the spot market were poor, and social inventories continued to accumulate. However, in the short term, the power rationing in Guizhou may allow aluminum prices to stop falling and rebound.

Lead: The most-traded SHFE 2302 lead closed down 0.45% or 70 yuan/mt at 15,620 yuan/mt, with open interest down 6,522 lots to 52,243 lots.

SHFE lead hovered at a low level, and the cargo holders quoted based on the market dynamics. Some sellers held the prices firm amid tight supply, while downstream players were more active in making inquiries, and restocked on demand. The sources from the smelters were slightly more popular.

Zinc: The most-traded SHFE 2302 zinc closed up 0.5% or 115 yuan/mt at 23,230 yuan/mt, with open interest down 1,818 lots to 87,451 lots.

According to SMM data, zinc ingot social inventories across seven major markets in China totalled 67,200 mt as of this Friday (January 6), up 12,500 mt from the previous week and 4,000 mt from this Tuesday (January 3). In the spot market, more downstream players took holidays for the Chinese New Year, alluding the imminent seasonal low on the consumption side. With market sentiment cooling down, SHFE zinc is likely to move rangebound.

Tin: The most-traded SHFE 2302 tin closed down 0.37% or 760 yuan/mt at 206,470 yuan/mt, with open interest up 10,233 lots to 53,671 lots.

In the spot market, the spread among quotes offered by the smelters expanded, and some were obviously firmer to their prices. The premiums/discounts offered by the traders rose slightly. The market transactions were slightly boosted after the price fell, but cooled down quickly after the price rallied. Downstream players still purchased on rigid demand.

Nickel: The most-traded SHFE 2302 nickel closed down 6.05% or 13,530 yuan/mt at 210,200 yuan/mt, with open interest down 1,318 lots to 61,693 lots.

In the spot market, Jinchuan nickel was in premiums of 10,000 yuan/mt, up 2,750 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 6,300-7,000 yuan/mt, with an average of 6,650 yuan/mt, up 400 yuan/mt on a daily basis. The market transactions picked up today as the spot prices fell today. For nickel briquette, the prices stood between 210,500-212,500 yuan/mt, down 16,600 yuan/mt from the previous trading day.

[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.]