SMM Evening Comments (Apr 7): Shanghai Nonferrous Metals Closed mostly with Gains on Eased Market Sentiment

SHANGHAI, Apr 7 (SMM) - Shanghai nonferrous metals closed mostly with gains in day trading. On the macro front, the US initial jobless claims released overnight were higher than expected. Besides, the Fed made hawkish remarks, saying that the tightening of financial markets will not trigger a severe economic recession and that the rate hikes should continue. However, the market sentiment eased during the day.
 

SHFE copper rose 0.63%, aluminium gained 0.51%, lead grew 0.62%, zinc climbed 0.18%, tin fell 0.45%, and nickel soared 3.39%.

Copper: SHFE 2305 copper closed up 0.63% or 430 yuan/mt to 69,040 yuan/mt. The open interest rose 830 lots to 165,833 lots.

Intraday spot premiums once dropped on the inflow of imported copper and the backwardation structure of the front-month and next-month contract spread. Afterwards, the futures prices declined to below 69,000 yuan/mt, encouraging downstream purchases. Spot premiums will be affected by the SHFE copper contract spread approaching the delivery of SHFE 2304 copper next week, hence the spot trading will be in a tug-of-war.

Aluminium: SHFE 2305 aluminium prices closed at 18,690 yuan/mt, up 0.51% or 95 yuan/mt.  The open interest added 207 lots to 203,665 lots.

The LME will be closed this Friday and next Monday for holidays. Fears of overseas recession is still a potential negative factor, but domestic consumption has shown resilience. From the perspective of inventory, aluminum ingot stocks have been in a downward trend. In terms of downstream sectors, except for the weak performance of aluminum alloy sector, operating rates in the rest of downstream processing sectors are expected to maintain a slight increase in the short term. On the whole, in the absence of disruptions on the supply side, domestic consumption can still give some support to aluminum prices, which are expected to hover sideways in the short term.

Lead: SHFE 2305 lead closed up 95 yuan/mt or 0.62% at 15,320 yuan/mt. The open interest dipped 1,805 lots to 51,292 lots.

SHFE lead prices were on the rise. Holders became more willing to ship, but the market supply stood low. At the same time, downstream companies maintained on-demand purchases, and they were cautious about purchasing some high-priced goods. The most-traded SHFE lead contract will move rangebound in the short term on a stable macro front.

Zinc: SHFE 2305 zinc closed up 40 yuan/mt or 0.18% at 22,140 yuan/mt. The open interest grew 2,591 lots to 106,033 lots.

Zinc prices remained volatile today, and the spot market was in turmoil. Downstream companies made some restocking when zinc prices fell yesterday. And today, the spot market remained quiet, and the overall trading volume decreased somewhat.

Tin: SHFE 2305 tin closed down 880 yuan/mt or 0.45% at 196,700 yuan/mt. The open interest dropped 4,835 lots to 55,098 lots.

Nickel: SHFE 2305 nickel closed up 5,880 yuan/mt or 3.39% at 179,300 yuan/mt. The open interest added 8,276 lots to 83,751 lots.

On April 7, spot premiums of Jinchuan nickel were quoted 8,500-9,000 yuan/mt. The average price was 8,750 yuan/mt, up 100 yuan/mt from the previous trading day. Premiums of NORNICKEL nickel stood at 7,500-8,500 yuan/mt. The average premium was 8,000 yuan/mt, an increase of 1,800 yuan/mt from the previous trading. The spread between SHFE 2304 and 2305 contracts has expanded gradually since yesterday afternoon, with a peak value of about 10,000 yuan/mt. As of early trading today, the spread narrowed to about 7,000 yuan/mt. In such a context, the premiums of NORNICKEL nickel surged. Nickel briquette prices were 181,200-181,500 yuan/mt, an increase of 3,800 yuan/mt from the previous trading day. The transactions 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.]