SMM Evening Comments (Feb 9): Shanghai Nonferrous Metals Closed Mixed amid Mixture of Bulls and Bears

SHANGHAI, Feb 9 (SMM) – Shanghai nonferrous metals closed with mixed in day trading. Wednesday's speech by Fed Governor Waller on the U.S. economic outlook indicated that current inflation has not been significantly contained and interest rates are likely to be higher than market expectations. Most Fed officials also said the federal funds rate will rise above 5% this year. In China, the investors have begun to bet on the demand recovery.

SHFE copper rose 0.65%, aluminium fell 0.94%, lead grew 0.3%, zinc lost 0.64%, tin dropped 0.22%, and nickel ticked up 0.24%.

Copper: The most-traded SHFE 2303 copper closed up 0.65% or 440 yuan/mt at 68,640 yuan/mt, with open interest down 5,136 lots to 154,927 lots.

In the spot market, the spot discounts narrowed to close to 0 as downstream consumption picked up.

Aluminium: The most-traded SHFE 2303 aluminium closed down 0.94% or 180 yuan/mt at 18,930 yuan/mt, with open interest down 8,194 lots to 185,053 lots.

On the supply side, the operating aluminium capacity fell to 40.1 million mt in early February, and the output is expected to be 3.07 million mt this month. Smelters in Guizhou and Yunnan maintained production cuts. Although the social inventory kept accumulating, downstream consumption and procurement are gradually becoming active. It is expected that aluminium prices will still fluctuate rangebound in the short term. Market players should pay attention to the risk of the Fed's hawkish stance and bigger-than-expected accumulation of domestic and overseas inventories.

Lead: The most-traded SHFE 2303 lead closed up 0.3% or 45 yuan/mt at 15,265 yuan/mt, with open interest down 1,766 lots to 67,826 lots.

In the spot market, SHFE lead continued to stay rangebound, and the cargo holders made sold based on market dynamics with small discounts. The downstream players still purchased on demand, and mostly with long-term orders. The traders ramped up the inquiries, and favoured sources with large discounts. The market transactions were limited but the sentiment was moderate.

Zinc: The most-traded SHFE 2303 zinc closed down 0.64% or 150 yuan/mt at 23,280 yuan/mt, with open interest up 3,581 lots to 84,353 lots.

Downstream players still purchased mainly on rigid demand though zinc price dropped and the traders lowered the quotations, and the market transactions extended the weakness.

Tin: The most-traded SHFE 2303 tin closed down 0.22% or 490 yuan/mt at 218,690 yuan/mt, with open interest up 4,114 lots to 36,237 lots.

In the spot market, SHFE tin dropped, and transactions of tin ingots improved when the prices were low. SHFE warrants added 38 mt to 7,499 mt.

Nickel: The most-traded SHFE 2303 nickel closed up 0.24% or 510 yuan/mt at 210,500 yuan/mt, with open interest down 8,025 lots to 63,172 lots.

In the spot market, Jinchuan nickel was in premiums of 6,100-7,500 yuan/mt, with an average of 6,800 yuan/mt, down 600 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 5,800-6,100 yuan/mt, with an average of 5,950 yuan/mt, down 600 yuan/mt on a daily basis. The premiums of NORNICKEL nickel dropped as the cargoes gradually arrived at ports, and the market inquiries and transactions were both poor. For nickel briquette, the prices stood between 214,200-214,800 yuan/mt, down 2,000 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.]