SMM Evening Comments (Mar 23): Shanghai Nonferrous Metals Closed Mostly with Gains as Fed Nailed a Quarter-point Rate Hike

SHANGHAI, Mar 23 (SMM) - Shanghai nonferrous metals closed mostly with gains in day trading. On the macro front, the Fed raised the rate by 25 basis points as expected, which suggests the agency prioritised curbing inflation rather than guarding against financial risks. The traders were concerned about the spread of banking crisis in the wake of continuous rate hikes. The US dollar index fell to about 102.

SHFE copper added 0.44%, aluminium gained 0.50%, lead rose 0.23%, zinc shed 1.06%, tin ticked up 0.50%, and nickel increased dropped 0.85%.

Copper: The most-traded SHFE 2305 copper closed up 0.44% or 300 yuan/mt at 68,350 yuan/mt, with open interest up 4,013 lots to 161,802 lots.

In the spot market, as spread between front-month and next-month SHFE copper contracts narrowed, the spot premiums rose steadily. Almost no goods holders were willing to ship at low prices, so trades were mainly made between traders.

Aluminium: The most-traded SHFE 2305 aluminium closed up 0.50% or 90 yuan/mt at 18,235 yuan/mt, with open interest up 4,636 lots to 224,813 lots.

On the fundamentals, the domestic supply side has recovered slightly. The improvement in downstream consumption has driven the rapid destocking of aluminium ingot stocks. The fundamentals are well supported, and the short-term aluminium prices are likely to fluctuate rangebound.

Lead: The most-traded SHFE 2305 lead closed up 0.23% or 35 yuan/mt at 15,375 yuan/mt, with open interest down 3,326 lots to 56,814 lots.

SHFE lead prices strengthened, but spot prices barely changed from yesterday, with spot premiums holding in Zhejiang, Jiangsu and Shanghai where the supplies were tight. Meanwhile, lead-acid battery market entered the off-season, and downstream enterprises only purchased as needed and refrained from accepting high-priced lead ingots. The spot transactions were thin as a result.

Zinc: The most-traded SHFE 2305 zinc closed down 1.06% or 235 yuan/mt at 22,035 yuan/mt, with open interest up 11,933 lots to 110,000 lots.

Zinc prices weakened today, and downstream purchases were suppressed when downstream enterprises faced environmental protection-related problems. Since most downstream buyers were bearish, the transactions became poor.

Tin: The most-traded SHFE 2304 tin closed up 0.5% or 930 yuan/mt at 187,700 yuan/mt, with open interest down 6,733 lots to 46,149 lots.

As tin futures prices hovered at highs, more smelters were willing to offer quotes in the morning session, but they were reluctant to make shipment. The spot transactions were slack amid poor inquiries.  

Nickel: The most-traded SHFE 2304 nickel closed down 0.85% or 1,480 yuan/mt at 173,060 yuan/mt, with open interest down 1,617 lots to 53,141 lots.

In the spot market, Jinchuan nickel was quoted in premiums of 7,600-7,800 yuan/mt, with an average of 7,700 yuan/mt, down 200 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 2,700-2,900 yuan/mt, with an average of 2,800 yuan/mt, don 100 yuan/mt from the prior trading day. The spot premiums stayed firm as domestic supplies of pure nickel were tight when some pure nickel was exported. For nickel briquette, the prices stood between 175,300-175,600 yuan/mt, up 50 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.]