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SMM Evening Comments (Apr 4): Shanghai Nonferrous Metals Closed with Losses on Worries about Rising US Inflation

iconApr 4, 2023 18:00
Shanghai nonferrous metals closed with losses in day trading.

SHANGHAI, Apr 4 (SMM) - Shanghai nonferrous metals closed with losses in day trading. On the macro front, the US ISM manufacturing PMI recorded 46.3 in March, which was lower than expected, hitting a new low since May 2020. Besides, crude oil prices surged, arousing worries about rising US inflation. The bearish macro sentiment weighed on metals prices.

SHFE copper dipped 0.42%, aluminium fell 0.13%, lead dropped 0.07%, zinc declined 0.80%, tin lost 0.75%, and nickel decreased 0.79%.

Copper: SHFE 2305 copper closed down 0.42% or 290 yuan/mt at 69,080 yuan/mt. Open interest stood at 170,012 lots, down 2,888 lots.

The intraday spot premiums trended lower. Transactions of mainstream standard-quality copper were poor because of the imports of high-quality copper. Around 10:00 a.m. CST, premiums of mainstream standard-quality copper were 60-80 yuan/mt, and those of high-quality copper stood at 70-80 yuan/mt. Guixi copper was shipped at premiums of 70 yuan/mt, while premiums of hydro-copper were around 30 yuan/mt. The sales of high-quality copper at low prices during the day weakened the transactions of mainstream standard-quality copper. Holders of hydro-copper held their quotes firm since the supply was unlikely to be sufficient.

Aluminium: SHFE 2305 aluminium closed down 0.13% or 25 yuan/mt at 18,675 yuan/mt.  Open interest stood at 211,216 lots, down 5,275 lots.

Output cuts by OPEC+ will boost the short-term oil prices. Amid the rebound in energy prices, countermeasures by the US are also crucial. The tug-of-war between longs and shorts will escalate amid supply disruptions, inflation expectations, and recession fears. If the US Fed continues to raise interest rates, this will pose threat to aluminium prices in the long run. However, if interest rate hike slows down and energy prices rise, aluminium prices will be supported. Given variables on the macro front and the fact that downstream consumption has not exceeded market expectations, aluminium prices will move rangebound.

Lead: SHFE 2305 lead dipped 0.07% or 10 yuan/mt to 15,205 yuan/mt. Open interest stood at 54,640 lots, up 615 lots.

SHFE lead moved rangebound with some downward potential. Holders raised their quotes on low spot liquidity. Downstream companies purchased on demand. Traders intended to restock on dips. Small order traders improved. The most-traded SHFE lead contract will move rangebound in the short term on a stable macro front.

Zinc: SHFE 2305 zinc prices dropped -0.80% or 180 yuan/mt to  22,450   yuan/mt. Open interest stood at 95,216 lots, down 2,294 lots.

Spot premiums rose sharply today, but the goods were still traded at SMM average price. Bearish downstream companies were cautious in restocking.

Tin: SHFE 2305 tin prices fell 0.75% or 1,540 yuan/mt to 203,880 yuan/mt. Open interest stood at 55,801 lots, down 4,207 lots.

Nickel: SHFE 2305 nickel closed down 0.79% or 1,400 yuan/mt at 176,860 yuan/mt.  Open interest stood at 73,839 lots, down 8,559 lots.

On April 4, premiums of Jinchuan nickel were 8,200-8,500 yuan/mt. The average premium stood at 8,350 yuan/mt, down 300 yuan/mt from the previous trading day. NORNICKEL nickel was quoted at premiums of 5,700-6,200 yuan/mt, with an average premium of 5,950 yuan/mt, down 200 yuan/mt from a day ago. The spot transactions were acceptable. Nickel briquette prices were 179,800-180,300 yuan/mt, a decrease of 950 yuan/mt from a day ago. The transactions of nickel briquette were slack as it was still traded at premiums over nickel sulphate.

[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.]


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