SMM Evening Comments (Apr 10): Shanghai Nonferrous Metals Closed Mixed amid Lower-than-expected US Macro Data

SHANGHAI, Apr 10 (SMM) - Shanghai nonferrous metals closed mixed in day trading. The US non-farm payrolls added 236,000 jobs in March (the expected reading was 239,000), and the unemployment rate dropped slightly to 3.5%. The annual rate of average hourly wages, which has received much attention, was 4.2% (the forecast figure was 4.3%), indicating a slight colder US job market. The CME's "Fed Watch Tool" showed that the probability that the FOMC might continue to raise the rates at the May meeting jumped to 70%.

SHFE copper rose 0.22%, aluminium dipped 0.13%, lead gained 0.16%, zinc rose 0.20%, tin fell 2.62%, and nickel added 0.85%.

Copper: SHFE 2305 copper closed up 150 yuan/mt or 0.22% at 68,740 yuan/mt. The open interest fell 3,336 lots to 162,497 lots.

Spot premiums trended lower today due to the delivery of the SHFE 2304 copper. The backwardation structure of the front-month and next-month contracts expanded and greatly suppressed the premiums, and some traders undercut the prices to restock. The premiums can hardly grow during the delivery cycle of SHFE 2304 copper.

Aluminium: SHFE 2305 aluminium closed down 25 yuan/mt or 0.13% at 18,615 yuan/mt. The open interest dipped 1,968 lots to 201,697 lots.

On the macro level, although US non-farm payrolls released last Friday night dropped, unemployment rate data showed that the labour market was resilient, intensifying expectations for the Fed to raise interest rates. The domestic aluminium supply is estimated to maintain an upward trend in the second quarter. How the power supply situation in Yunnan will evolve deserves close attention. SMM predicts that the operating aluminium capacity in Yunnan will barely change in the foreseeable future. The demand is still expected to pick up, and aluminium ingot inventory is expected to maintain destocking cycle. With supply and demand both increasing, aluminium prices may fluctuate rangebound.

Lead: SHFE 2305 lead closed up 25 yuan/mt or 0.16% at 15,320 yuan/mt. The open interest dropped 1,279 lots to 50,013 lots.

SHFE lead moved sideways today. Spot holders raised their quotes on low market supply. The downstream companies held a wait-and-see sentiment and restocked cautiously. Some goods under long-term contracts were traded on buyers’ rigid demand, and the small-order trading was average. The most-traded SHFE lead contract will move rangebound in the short term on a stable macro front.

Zinc: SHFE 2305 zinc prices gained 45 yuan/mt or 0.20% to 22,130 yuan/mt. The open interest decreased 1,289 lots to 104,744 lots.

Zinc prices remained volatile today, and the spots were mainly traded at premiums of 5 yuan/mt over the SMM average price. Under the support of low inventory, traders were less willing to ship at lows, while the downstream companies only restocked on rigid demand since they have made restock on rigid demand last week.

Tin: SHFE 2305 tin closed down 5,150 yuan/mt or 2.62% at 191,260 yuan/mt. The open interest rose 4,207 lots to 59,305 lots.

Nickel: SHFE 2305 nickel closed up 1,500 yuan/mt or 0.85% at 178,530 yuan/mt. The open interest fell 7,813 lots to 75,938 lots.

On April 10, premiums of Jinchuan nickel were 8,500-9,000 yuan/mt. The average premium stood at 8,750 yuan/mt, flat from the previous trading day. NORNICKEL nickel was quoted at premiums of 7,500-8,000 yuan/mt, with an average premium of 7,750 yuan/mt, down 250 yuan/mt from a day ago. The spread between the SHFE front-month and next-month contracts did not narrow today. The prices of NORNICKEL nickel hovered at highs despite the drop in futures prices in the early trading. Nickel briquette prices were 180,700-181,200 yuan/mt, down 400 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.]