SMM Evening Comments (Jan 30): Shanghai Nonferrous Metals Missed New Year Rally

SHANGHAI, Jan 30 (SMM) – Shanghai nonferrous metals closed mostly with losses on the first trading day after the Chinese New Year holiday, and missed the Near Year rally. The metals prices fell on weak fundamentals as bullish factors of expected recovery of demand and economy in China have been basically digested, while the consumption has not yet picked up substantially

SHFE copper dropped 1.17%, aluminium lost 0.6%, lead fell 0.07%, zinc declined 1.73%, tin added 2.12%, and nickel grew 2.66%.

Copper: The most-traded SHFE 2303 copper closed down 1.17% or 820 yuan/mt at 69,330 yuan/mt, with open interest down 7,794 lots to 177,532 lots.

In the spot market, the spot premiums fell after opening high, and the market saw merely the participation of traders.

Aluminium: The most-traded SHFE 2303 aluminium closed down 0.6% or 115 yuan/mt at 19,000 yuan/mt, with open interest up 1,324 lots to 194,267 lots.

SHFE aluminium fell on weak fundamentals including rising supply amid easing power shortage in Guizhou province, as well as significantly accumulating social inventory.

Lead: The most-traded SHFE 2303 lead closed down 0.07% or 10 yuan/mt at 15,230 yuan/mt, with open interest up 2,137 lots to 80,759 lots.

In the spot market, the cargo holders started to offer quotations to test market response with upstream and downstream players resuming the production one after another. Downstream players, with relatively abundant lead ingot inventory, started to make inquiries, while the actual transactions were muted.

Zinc: The most-traded SHFE 2303 zinc closed down 1.73% or 425 yuan/mt at 24,175 yuan/mt, with open interest down 3,448 lots to 99,202 lots.

SHFE zinc contract is now subject to the fundamentals after the bullish factors of expected demand recovery and slowing US rate hikes were digested during the Chinese New Year holiday.

Tin: The most-traded SHFE 2303 tin closed up 2.12% or 4,920 yuan/mt at 236,870 yuan/mt, with open interest down 2,222 lots to 37,421 lots.

Market trading resumed as downstream fabricators have been resuming the production, but actual transaction were still sluggish. SHFE warrants inventory fell 12 mt to 6,424 mt today.

Nickel: The most-traded SHFE 2303 nickel closed up 2.66% or 5,690 yuan/mt at 219,960 yuan/mt, with open interest down 2,372 lots to 68,458 lots.

Both longs and shorts left the market today, while the shorts were more active in closing their positions, giving certain momentum to SHFE nickel. The spot prices of nickel were high in morning trade, and the transactions were poor. For NPI, the stainless steel mills immediately made inquiries after the CNY holiday, and NPI prices rose along with rising spot stainless steel prices. With regard to stainless steel, the transactions were good in Wuxi yesterday, hence the prices rose. Delong released a large amount of stainless steel to the market ahead of the holiday, keeping the social inventory at a high level. In addition, most downstream players of stainless steel will not resume the production until around the Lantern Festival, hence the short-term restocking will be inactive. To sum up, SHFE nickel is likely to fall in the near term.

[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.]