SMM Evening Comments (Feb 13): Shanghai Nonferrous Metals Closed with Losses on Strong US Dollar

SHANGHAI, Feb 13 (SMM) – Shanghai nonferrous metals closed in the negative territory on strong US dollar. Last Friday night, US one-year inflation is expected to rebound to 4.2% in February, up from 3.9% in January; the preliminary value of February University of Michigan consumer confidence index was lower than expected, together shoring up the expectations of continued rate hike in the US. The US dollar index thus stopped falling and rebounded, weighing on metals prices.

SHFE copper shed 0.48%, aluminium fell 1.01%, lead declined 0.59%, zinc lost 1.31%, tin dropped 1.31%, and nickel slid 3.48%.

Copper: The most-traded SHFE 2303 copper closed down 0.48% or 330 yuan/mt at 68,150 yuan/mt, with open interest down 6,063 lots to 146,260 lots.

The spot prices dropped after opening high, and downstream consumption was boosted when the prices dropped.

Aluminium: The most-traded SHFE 2303 aluminium closed down 1.01% or 190 yuan/mt at 18,550 yuan/mt, with open interest down 2,405 lots to 172,516 lots.

Production reduction in Yunnan has not yet been implemented, and market expectations for output cuts have weakened. If the scale of future production reduction meets expectations, the trading logic in the aluminium market may shift to cost, downstream consumption and inventory. Overall, the current aluminium market is filled with bearish and bullish factors, which is expected to keep aluminium prices rangebound in the short term.

Lead: The most-traded SHFE 2303 lead closed down 0.59% or 90 yuan/mt at 15,255 yuan/mt, with open interest up 945 lots to 60,843 lots.

SHFE lead dropped, and the cargo holders shipped based on market dynamics. The offered discounts narrowed, and the downstream players purchased on dips. But the actual transactions were limited amid ample sources under long-term orders. The inventory change approaching the delivery of SHFE 2302 is worth attention.

Zinc: The most-traded SHFE 2303 zinc closed down 1.31% or 305 yuan/mt at 22,960 yuan/mt, with open interest up 3,174 lots to 85,520 lots.

On the fundamentals, new orders from downstream players were less than expected, and the consumption recovery requires further verification.

Tin: The most-traded SHFE 2303 tin closed down 1.31% or 2,870 yuan/mt at 216,420 yuan/mt, with open interest down 1,348 lots to 48,808 lots.

In the spot market, spot prices rose slightly compared with last week, and low-priced tin ingot was more popular. The overall transactions were poor. SHFE warrants inventory added 333 mt to 7,795 mt.

Nickel: The most-traded SHFE 2303 nickel closed down 3.48% or 7,520 yuan/mt at 208,500 yuan/mt, with open interest down 9,306 lots to 65,556 lots.

In the spot market, Jinchuan nickel was in premiums of 7,000-7,500 yuan/mt, with an average of 7,250 yuan/mt, up 500 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 5,300-5,800 yuan/mt, with an average of 5,550 yuan/mt, down 200 yuan/mt on a daily basis. Rising US dollar, a safe haven, attracted risk aversion-oriented capitals, and nonferrous metals prices dropped. The overall transactions remained poor though spot prices of pure nickel dropped. For nickel briquette, the prices stood between 210,700-211,600 yuan/mt, down 10,100 yuan/mt on a daily basis.

[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.]