SHANGHAI, Jan 17 (SMM) – LME and SHFE base metals closed mixed overnight. On the macro front, the market attention was now on the weak demand ahead of Chinese New Year holiday. The rise in the US dollar also put pressure on metals prices.

LME copper lost 1.52%, aluminium rose 0.33%, lead slid 1.74%, and zinc dropped 1.2%;

SHFE copper lost 0.29%, aluminium rose 0.27%, lead grew 0.29%, and zinc dropped 0.52%.

Copper: LME copper opened at $9,170/mt yesterday and dropped to a low of $9,090/mt after climbing to $9,186.5/mt. At last, the contract closed at $9,100/mt, down 1.52%. The trading volume was 10,000 lots, and open interest stood at 259,000 lots.

SHFE 2303 copper opened at 68,740 yuan/mt overnight, once hitting the highest and lowest of 68,840 yuan/mt and 68,330 yuan/mt respectively. At last, the contract closed at 68,400 yuan/mt, down 0.29%. The trading volume was 23,000 lots, and open interest stood at 196,000 lots.

On the macro front, the market shifted the focus to weak demand. The rise in the US dollar also put pressure on copper prices, thus the futures prices fluctuated downward overnight.

On the fundamentals, As of Monday January 16, SMM copper inventory across major Chinese markets added 18,700 mt from last Friday to 154,200 mt, up 61,700 mt YoY. The delivery of the SHFE 2301 copper pushed up the copper stocks. On the other hand, the downstream consumption weakened approaching the Chinese New Year. The downstream consumption is expected to fall further as the Chinese New Year holiday is coming closer. Therefore, copper prices may remain rangebound in the near future.

Aluminium: The most-traded SHFE 2302 aluminium contract opened at 18,495 yuan/mt overnight before closing at 18,545 yuan/mt, up 50 yuan/mt or 0.27%.

LME aluminium opened at $2,595/mt on Monday and closed at $2,603.5/mt, an increase of $8.5/mt or 0.33%.

Overseas macro data was positive recently, and China released a series of favourable policies, boosting market confidence. However, due to poor downstream demand ahead of the upcoming CNY holiday and rapidly rising inventory, aluminium prices will have limited upside room.

Lead: Last night, LME lead opened at $2,240.5/mt and fell 1.74% to $2,205.5/mt after hitting the highest point at $2,250/mt and the lowest point at $2,205.5/mt. The open interest increased 3,526 lots to 118,000 lots from the previous trading day. The trading volume decreased 3,486 lots to 3,873 lots.

The most-traded SHFE 2303 lead contract opened at 15,345 yuan/mt and closed at 15,365 yuan/m, up 0.29%, after briefly hitting the lowest point at 15,305 yuan/mt and the highest point at 15,420 yuan/mt. The open interest increased 1,087 lots to 80,675 lots from the previous trading day. The trading volume decreased 37,006 lots to 24,176 lots.

Zinc: LME zinc closed at $3,280/mt on Monday, down $40/mt or 1.2%. The open interest added 10,922 lots to some 201,000 lots. LME zinc inventory fell 475 mt to 20,500 mt.

The most traded SHFE 2303 zinc contract closed at 24,125 yuan/mt overnight, down 125 yuan/mt or 0.52%. The open interest added 7,477 lots to 83,000 lots. On the macro front, overseas capitals flew into China after it relaxed the pandemic control measures and RMB appreciated, which shored up SHFE zinc. But the fundamentals in China remained bearish, and the production curtailment among smelters has been less significant than in the same period in previous years, hence the supply should have increased. The consumption side, however, remained weak and the consumers generally have longer holidays. SMM zinc ingot social inventory amounted to 89,300 mt.

Overnight, the Dalian Commodity Exchange announced that since the settlement on January 19, 2023, the limit up/down for iron ore futures contracts and margins for hedging transactions have been adjusted to 12%, and the margins for speculative transactions have been adjusted to 14%. China will release GDP and industrial value added data on Tuesday. The GDP is expected to grow by 1.8% year-on-year in the fourth quarter of 2022 and 2.8% for the whole year; it is expected to grow by 0.2% year-on-year in December. Industrial value added is expected to increase by a modest 0.2% year-on-year in December.

Tin: Overnight, SHFE tin hovered at highs, closing at around 225,800 yuan/mt. The 2303 contract became the most-traded one. The domestic tin inventory under SHFE warrants continued to increase due to delivery of the 2301 contract. The spot market maintained discounts against SHFE front-month contract. LME tin inventory fell slightly. Overseas market maintained discounts. Import profits narrowed further. Supply and demand both fell as the CNY holiday is only days away. It remains to be seen whether the macro-driven price rise will sustain.

Nickel: On the supply side, SHFE nickel prices fluctuated with some declines this week. Unlike NORNICKEL nickel, there have been few quotations of Jinchuan nickel in the market recently. In terms of NPI, most of the factories carry low in-plant inventories of finished products. In addition, the production of some Indonesia NPI is hindered by workers' strikes and other reasons, affecting the supply to a certain extent, which set off a storm for the market. On the demand side, according to SMM research, steel mills stopped delivering goods to the market due to the logistics suspension in many places in China. Besides, most market participants were on the Chinese New Year holiday, thus the social inventory grew slightly. As for alloys, the producers’ pre-holiday restocking is coming to an end this week, and the demand is weakening. To sum up, pure nickel faces weak supply and demand. In the short term, nickel prices will move rangebound with some drops.

[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.]