SMM Evening Comments (Feb 24): Shanghai Nonferrous Metals Closed with Losses on Haunting Rate Hike Worries

SHANGHAI, Feb 24 (SMM) – Shanghai nonferrous metals closed mostly with losses in day trading. On the macro front, the U.S. GDP in the fourth quarter dropped to 2.7% amid weakening consumption, and Q4 core PCE inflation added 4.3%. At the same time, the U.S. job market is still resilient. Coupled with the hawkish signals from US Fed meeting minutes, the market is increasingly worried about interest rate hikes, and the dollar index remained high.

SHFE copper fell 0.87%, aluminium slid 0.59%, lead dropped 0.36%, zinc flat, tin shed 2.49%, and nickel lost 1.52%.

Copper: The most-traded SHFE 2304 copper closed down 0.87% or 610 yuan/mt at 69,610 yuan/mt, with open interest down 489 lots to 163,360 lots.

Downstream demand was boosted to some extent after SHFE copper fell below 70,000 yuan/mt, and market transactions picked up slightly. The sources traded are mostly non-registered copper and hydro-copper, and the transactions of mainstream copper remained poor.

Aluminium: The most-traded SHFE 2304 aluminium closed down 0.59% or 110 yuan/mt at 18,635 yuan/mt, with open interest up 6,317 lots to 205,167 lots.

On the supply side, market has gradually digested the impact of production cuts in Yunnan. The inventory of aluminium ingots continued to increase, and the supply in the spot market was relatively abundant. Downstream purchases were poor.

Lead: The most-traded SHFE 2304 lead closed down 0.36% or 55 yuan/mt at 15,350 yuan/mt, with open interest down 949 lots to 54,644 lots.

The cargo holders still quoted based on the market dynamics today. The supply in east China was relatively sufficient, but downstream demand was muted approaching the month-end.

Zinc: The most-traded SHFE 2304 zinc closed flat at 23,505 yuan/mt, with open interest up 3,891 lots to 93,109 lots.

SMM zinc ingot social inventory across seven major markets in China totalled 181,300 mt as of this Friday, down 3,200 mt from last Friday and down 200 mt from Monday. Though the social inventory dropped, the transactions in the spot market were poor, pointing to sluggish real consumption.

Tin: The most-traded SHFE 2303 tin closed down 2.49% or 5,430 yuan/mt at 212,430 yuan/mt, with open interest down 134 lots to 35,646 lots.

The spot prices were flat from yesterday, and downstream players demanded 210,000 yuan/mt, which encouraged the traders to ship. SHFE warrants inventory added 33 mt to 7,858 mt.

Nickel: The most-traded SHFE 2303 nickel closed down 1.52% or 3,140 yuan/mt at 203,370 yuan/mt, with open interest down 12,213 lots to 25,468 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 50 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 3,800-4,000 yuan/mt, with an average of 3,900 yuan/mt, down 250 yuan/mt. SHFE nickel fell again on the news front, while spot premiums were low as the most-traded SHFE nickel contract is likely to shift to SHFE 2304. For nickel briquette, the prices stood between 201,500-202,300 yuan/mt, down 6,200 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.]