SMM Evening Comments (Jan 10): Shanghai Nonferrous Metals Closed Mixed amid Hawkish Voices of US Fed Officials

SHANGHAI, Jan 10 (SMM) – Shanghai nonferrous metals closed mixed. On the macro front, the US dollar index was weak, and risked 102.9 on January 9. US Fed officials went "hawkish" again. Among them, the San Francisco Fed President said it is still too early to declare victory in controlling inflation, and a 25bp rate hike will be considered at the January meeting; the terminal interest rate is expected to be over 5%. The market players were increasingly worried about an economic recession.

Shanghai copper gained 1.45%, aluminium rose 1.37%, lead slid 0.22%, zinc added 1.76%, tin dropped 0.97%, and nickel declined 2.69%.

Copper: The most-traded SHFE 2303 copper closed up 1.45% or 950 yuan/mt at 66,590 yuan/mt, with open interest up 10,517 lots to 169,752 lots.

In the spot market, the spot premiums/discounts of copper cathode stood close to the flat line, and the market transactions were comparatively lacklustre.

Aluminium: The most-traded SHFE 2302 aluminium closed up 1.37% or 245 yuan/mt at 18,160 yuan/mt, with open interest down 14,598 lots to 149,679 lots.

The macro front is relatively bullish for SHFE aluminium price, and attention shall be paid to the economic readings overseas. On the fundamentals, SHFE aluminium fell steeply last week due to weak demand and more-than-expected inventory accumulation, but it rebounded on Monday and last night with boost from the macro front. SHFE aluminium is expected to move rangebound in the near term.

Lead: The most-traded SHFE 2302 lead closed down 0.22% or 35 yuan/mt at 15,530 yuan/mt, with open interest down 10,260 lots to 35,614 lots.

SHFE lead dropped from high, and the cargo holders were not active in making shipments. The prices of some deliverable brands were still firm, and the smelters quoted based on market dynamics. The downstream players were significantly less willing to purchase as they are about to be closed for Chinese New Year holiday. The trading market was quiet as a whole.

Zinc: The most-traded SHFE 2302 zinc closed up 1.76% or 410 yuan/mt at 23,735 yuan/mt, with open interest down 680 lots to 82,874 lots.

SHFE zinc rose for four straight days as of January 10 partly due to the strong performance of LME zinc. In addition, the upbeat expectations on real estate market in 2023 as well as highlighted UHV projects boosted SHFE zinc price to some extent although on the fundamentals, the supply remained strong while the demand was still muted.

Tin: The most-traded SHFE 2302 tin closed down 0.97% or 1,990 yuan/mt at 203,480 yuan/mt, with open interest up 2,527 lots to 46,047 lots.

In the spot market, the market transactions were more active in morning trade boosted by falling SHFE tin price. SHFE warrants inventory fell 48 mt to 5,247 mt today.

Nickel: The most-traded SHFE 2302 nickel closed down 2.69% or 5,700 yuan/mt at 206,020 yuan/mt, with open interest down 475 lots to 53,844 lots.

In the spot market, Jinchuan nickel was in premiums of 13,500-14,000 yuan/mt, with an average of 13,750 yuan/mt, up 2,250 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 6,900-7,300 yuan/mt, with an average of 7,100 yuan/mt, up 200 yuan/mt on a daily basis. The spot premiums rose as SHFE nickel fell, but the absolute spot prices continued to drop. The downstream players have basically completed their pre-holiday restocking, hence the market transactions were weak as a whole. For nickel briquette, the prices stood between 210,000-212,000 yuan/mt, down 5,900 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.]