SMM Evening Comments (Mar 27): Shanghai Nonferrous Metals Closed with Gains on Lowered Required Reserve Ratios in China

SHANGHAI, Mar 27 (SMM) - Shanghai nonferrous metals closed with gains in day trading. On the macro front, the People's Bank of China officially lowered required reserve ratios (RRR) today, which is expected to release 600 billion yuan of funds. This, coupled with extra 281 billion yuan fund provided through Medium-term Lending Facility (MLF) in the middle of the month, put the total medium- and long-term funds in March at nearly 900 billion yuan. The lowered RRR is anticipated to stabilise financial market and benefit economic development.

SHFE copper added 0.19%, aluminium gained 0.54%, lead inched higher 0.42%, zinc advanced 0.49%, tin jumped 3.56%, and nickel rose 0.47%.

Copper: The most-traded SHFE 2305 copper closed up 0.19% or 130 yuan/mt at 69,250 yuan/mt, with open interest down 2,519 lots to 171,084 lots.

In the spot market, the inventory in Guangdong continued to shrink due to low arrivals. Some cargo holders held prices firm, but downstream players were reluctant to restock amid rising copper prices. As a result, the poor transactions compelled suppliers to cut their offers. Yet, the spot prices rose again later when low-prices resources were sold out.

Aluminium: The most-traded SHFE 2305 aluminium closed up 0.54% or 100 yuan/mt at 18,480 yuan/mt, with open interest down 7,962 lots to 215,165 lots.

On the fundamentals, the resumption of production by aluminium 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 aluminium ingot social inventory to fall rapidly. The short-term aluminium prices may rally slightly, driven by improving fundamentals. However, macro uncertainty should be closely watched.

Lead: The most-traded SHFE 2305 lead closed up 0.42% or 65 yuan/mt at 15,440 yuan/mt, with open interest up 7,840 lots to 63,595 lots.

SHFE lead strengthened today, and goods holders quoted based on market dynamism. The scarce market supply pushed up some quotes. The consumption in the lead-acid battery market turned cold, and downstream enterprises mostly stood on the sidelines as month-end drew near. Therefore, the spot trading was light.

Zinc: The most-traded SHFE 2305 zinc closed up 0.49% or 110 yuan/mt at 22,545 yuan/mt, with open interest down 3,326 lots to 100,209 lots.

Zinc prices hovered at highs today, which prompted traders to make shipment. However, downstream enterprises only purchased as needed as their raw material stocks were sufficient. The overall transactions remained slack.  

Tin: The most-traded SHFE 2304 tin closed up 3.56% or 6,930 yuan/mt at 201,660 yuan/mt, with open interest down 16,391 lots to 36,979 lots.

Tin futures prices continued to surge, and more smelters were willing to offer quotes in the morning session and were keen on making shipment. However, the feedback from traders showed that the spot transactions were slack amid poor inquiries.  

Nickel: The most-traded SHFE 2304 nickel closed up 0.47% or 830 yuan/mt at 177,940 yuan/mt, with open interest down 10,221 lots to 39,780 lots.

In the spot market, Jinchuan nickel was quoted in premiums of 6,500-6,700 yuan/mt, with an average of 6,600 yuan/mt, down 1,100 from the previous trading day. NORNICKEL nickel was in premiums of 2,500-2,800 yuan/mt, with an average of 2,650 yuan/mt, down 200 yuan/mt from the prior trading day. The spot premiums declined on the approaching delivery of the front-month contract, but futures prices were boosted by positive macro front. For nickel briquette, the prices stood between 183,200-184,300 yuan/mt, up 5,750 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.]