SHANGHAI, Mar 24 (SMM) - LME and SHFE base metals closed with gains last night. On the macro front, the Federal Reserve is close to stopping interest rate hikes, while the Swiss National Bank and the Bank of England have pushed forward interest rate hikes. The US dollar index fell overnight.
Copper: LME copper closed with a gain of 0.68% at $8,989/mt overnight. Trading volume stood at 21,000 lots. Open interest stood at 244,000 lots. The most active SHFE 2305 copper contract finished at 69,120 yuan/mt overnight, up 0.91%. Trading volume was 48,000 lots and open interest stood at 166,000 lots.
On the macro front, the Federal Reserve is close to stopping interest rate hikes, while the Swiss National Bank and the Bank of England have pushed forward interest rate hikes. The US dollar index fell overnight, bolstering copper prices. In terms of fundamentals, the import loss of imported copper has expanded again recently, thus the inflow of imported copper has decreased. This eased concerns of some sellers. Copper prices rebounded yesterday, and the purchasing interest of downstream enterprises weakened. Trading was mainly made by traders. In terms of consumption, the market still adjusts the purchase volume appropriately according to the fluctuation of copper price, and it is expected that the demand will still show a slow recovery. Copper prices should remain rangebound at highs as the US index continued to decline.
Aluminium: Overnight, the most-traded SHFE 2305 aluminum contract opened at 18,260 yuan/mt, with its lowest and highest at 18,240 yuan/mt and 18,390 yuan/mt before closing at 18,345 yuan/mt, up 110 yuan/mt or 0.6%.
LME aluminum opened at $2,291/mt on Thursday, with its high and low at $2,345.5/mt and $2,287/mt respectively before closing at $2,326.5/mt, an increase of $41.5/mt or 1.82%.
On the macro level, U.S. Treasury Secretary Yellen changed her words, saying that "some additional policy tightening may be appropriate." The market interpreted this as the Fed hinting it may end raising interest rates soon, thus metals prices generally rose overnight. On the fundamentals, the resumption of production by aluminum smelters in Sichuan, Guizhou and other places has led to a slight recovery on the supply side. Downstream consumption continued to pick up, driving domestic aluminum ingot social inventory to fall rapidly. The short-term aluminum prices may rally slightly, driven by improving fundamentals and macro sentiment.
Lead: Last night, LME Lead opened at $2,114.5/mt and rose 0.02% to close at $2,107.5/mt after hitting the lowest point at $2,107/mt and the highest point at $2,139.5/mt. Open interest fell 11,655 lots to 103,000 lots, and trading volume rose 652 lots to 3,735 lots.
The most-traded SHFE 2305 lead contract opened at High 15,395 yuan/mt and closed at 15,370 yuan/m, up 0.1%, after briefly hitting the lowest point at 15,340 yuan/mt. Open interest fell 1,133 lots to 55,681 lots, and trading volume declined 30,664 lots to 13,532 lots.
Zinc: Overnight, LME zinc opened at $2,877/mt and closed up $18.5/mt or 0.64% at $2,895.5/mt. The trading volume was 6,584 lots, and open interest dropped 23,333 lots to 185,000 lots. LME inventory declined by 50 mt to 39,700 mt. Despite the small decline, the LME zinc inventory generally showed an upward trend. The marginal impact of the crisis brought by tightened liquidity was persisting. At the same time, the overseas expectations for growing zinc ingot supply and sluggish consumption together had limited fundamental support for LME zinc prices.
The most-traded SHFE 2305 zinc contract opened at 22,100 yuan/mt and closed at 22,455 yuan/mt, up 240 yuan/mt or 1.08%. Trading volume stood at 73,000 lots, and open interest lost by 2,280 lots to 108,000 lots. The momentum of SHFE zinc prices was suppressed by the potential of rising supply. In terms of consumption, since traders in the galvanised zinc market tended to purchase on rises instead of dips, the falling ferrous metal prices took a toll on the new orders for galvanised plate/sheet and structures. As such, the support for SHFE zinc prices from downstream consumption also weakened. However, SMM believes that the consumption will be resilient for some time considering the rigid demand during the ongoing peak season.
Tin: The SHFE 2304 tin contract rebounded sharply by 7,100 yuan/mt last night and close at 195,650 yuan/mt, up 3.77%.
On the fundamentals, the warrants inventory fell slightly and the spot market turned cold amid rising tin prices. In the spot market, the discounts of small brands fell slightly. The supply of imported tin was sufficient.
The SHFE 2304 tin contract rebounded sharply by 7,100 yuan/mt last night amid falling US dollar index and close at 195,650 yuan/mt, up 3.77%. Open interest increased by 1,027 lots to 47,176 lots.
To sum up, US Fed raised the interest rates by 25 basis point as expected, which eased the panic sentiment of economic recession. The current tin prices were still suppressed by the weak demand from downstream enterprises. Downstream processing companies cannot actually digest inventory by stocking up at low prices, and they still need to pay close attention to the progress of consumer confidence restoration.
Nickel: On the supply side, spot imports of pure nickel suffered losses, tightening the pure nickel supply in the market. Premiums stood stable near the month-end. In terms of NPI, frequent news of production reduction and shutdown of stainless steel mills were bearish for NPI prices. On the demand side, stainless steel prices declined following the futures prices. Transactions of 300-series stainless steel were relatively slack, and the prices fell further. In general, the fundamentals of pure nickel remained weak. SMM presumes that nickel prices will remain rangebound.
[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.]
