SMM Evening Comments (Feb 22): Shanghai Nonferrous Metals Market Quiet for Lack of Strong Stimulus

SHANGHAI, Feb 22 (SMM) – Shanghai nonferrous metals closed mostly with gains in day trading. On the macro front, the US manufacturing PMI rebounded in February, while accelerating growth in the service sector continues to spark inflation concerns. The January home sales fell to a 12-year low. The European Central Bank President reiterated another 50 basis point interest rate hike in March. The demand recovery in China is expected to remain positive, but downstream consumption has not yet posted a significant increase.

SHFE copper added 0.37%, aluminium slid 0.27%, lead gained 0.52%, zinc jumped 0.17%, tin rose 1.87%, and nickel lost 1.08%.

Copper: The most-traded SHFE 2303 copper closed up 0.37% or 260 yuan/mt at 70,090 yuan/mt, with open interest down 14,211 lots to 102,786 lots.

The market players mostly stood on the sidelines as SHFE copper once posted a gain of more than 1,000 yuan/mt in day trading.

Aluminium: The most-traded SHFE 2304 aluminium closed down 0.27% or 50 yuan/mt at 18,765 yuan/mt, with open interest up 6,833 lots to 191,052 lots.

On the supply side, production cuts in Yunnan continued to support aluminium prices. On the demand side, downstream buyers turned more cautious after aluminium prices went up. Market players will need to pay attention to the pace of downstream demand recovery.

Lead: The most-traded SHFE 2303 lead closed up 0.52% or 80 yuan/mt at 15,440 yuan/mt, with open interest down 12,656 lots to 27,863 lots.

The cargo holders quoted based on market dynamics with small discounts generally. The primary and secondary lead smelters were also active in making shipment, while downstream players were basically wait-and-see as they still held some stocks. Only some traders purchased when the discounts were great.

Zinc: The most-traded SHFE 2303 zinc closed up 0.17% or 40 yuan/mt at 23,550 yuan/mt, with open interest down 7,793 lots to 41,105 lots.

The overall transactions were poor. The downstream players were not in a hurry to purchase, while the traders lowered their offers to promote the sales.

Tin: The most-traded SHFE 2303 tin closed up 1.87% or 4,010 yuan/mt at 219,000 yuan/mt, with open interest down 190 lots to 42,617 lots.

The spot market was relatively quiet today as SHFE tin prices rose palpably, according to the traders. The discounts of various brands dropped slightly compared with a day ago.

Nickel: The most-traded SHFE 2303 nickel closed down 1.08% or 2,250 yuan/mt at 207,050 yuan/mt, with open interest down 4,308 lots to 45,212 lots.

In the spot market, Jinchuan nickel was in premiums of 6,000-6,300 yuan/mt, with an average of 6,150 yuan/mt, down 500 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 4,000-4,300 yuan/mt, with an average of 4,150 yuan/mt, down 600 yuan/mt. High nickel prices contained downstream demand recently, while the upstream players were relatively eager to sell, hence the spot premiums slumped. For nickel briquette, the prices stood between 211,300-212,300 yuan/mt, down 100 yuan/mt.

[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.]