SMM Evening Comments (Apr 11): Shanghai Nonferrous Metals Closed Mostly with Losses amid Possible Economic Recession Risk

Published: Apr 11, 2023 18:00

Source: SMM

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Shanghai nonferrous metals closed mostly with losses in day trading.

SHANGHAI, Apr 11 (SMM) - Shanghai nonferrous metals closed mostly with losses in day trading. On the macro front, US Fed officials made hawkish remarks and disclosed that the US credit environment is tightening, which may lead to the risk of an economic recession.

SHFE copper rose 0.16%, aluminium fell 1.04%, lead lost 0.10%, zinc dropped 0.58%, tin dipped 1.45%, and nickel grew 0.63%.

Copper: SHFE 2305 copper closed up 110 yuan/mt or 0.16% at 68,880 yuan/mt. The open interest added 6,477 lots to 168,974 lots.

As the delivery of SHFE 2304 copper is approaching, the spot prices today were quoted at a small discount affected by the fluctuation in the spread between the front-month and next-month copper contracts, encouraging the traders’ purchases. With the decline in the SHFE copper prices, downstream companies increased their purchasing volume, hence some cargo holders raised the premiums to above 0 yuan/mt to ship cargoes.

Aluminium: SHFE 2305 aluminium closed down 195 yuan/mt or 1.04% at 18,485 yuan/mt. The open interest dropped 11,741 lots to 189,956 lots.

On the macro level, US Federal Reserve officials repeatedly sent hawkish signals, growing market expectations for the Fed to raise interest rates. In terms of fundamentals, the domestic aluminium supply will maintain a slow upward trend in the second quarter. The demand is gradually picking up, and aluminium ingot social inventory has maintained a destocking cycle. With supply and demand both growing, coupled with macro headwinds, the short-term aluminium prices may move rangebound. It is necessary to pay attention to power supply situation in Yunnan and the pace of interest rate hikes by the Federal Reserve.

Lead: SHFE 2305 lead prices lost 15 yuan/mt or 0.10% to 15,285 yuan/mt. The open interest declined 3,918 lots to 46,095 lots.

SHFE lead prices fluctuated downward, and the spot supply remained low approaching the delivery of SHFE 2304 lead, which enabled the cargo holders to raise their quotes. Some traders intended to buy low-priced spots under warrants and thus increased the inquiries. Some downstream companies restocked on dips based on their rigid demand, slightly pushing up the market trading of small orders. The most-traded SHFE lead contract will move rangebound in the short term on a stable macro front.

Zinc: SHFE 2305 zinc closed down 130 yuan/mt or 0.58% at 22,125 yuan/mt. The open interest gained 923 lots to 105,667 lots.

Spot premiums rose today, and the market transactions were relatively active in the early trading. The trades decreased when the futures prices grew, but the overall trading was still good on low spot prices. #1 zinc ingot was traded at around 21,650-21,720 yuan/mt.

Tin: SHFE 2305 tin closed down 2,800 yuan/mt or 1.45% at 190,730 yuan/mt. The open interest decreased 5,259 lots to 54,046 lots.

Nickel: SHFE 2305 nickel closed up 1,120 yuan/mt or 0.63% at 180,000 yuan/mt. The open interest grew 5,264 lots to 81,202 lots. On April 11, 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 7,000-8,000 yuan/mt, with an average premium of 7,500 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 180,500-181,500 yuan/mt, an increase of 50 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.]

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