SMM Evening Comments (Apr 12): Shanghai Nonferrous Metals Closed Mixed as Market Awaits US Inflation Data

SHANGHAI, Apr 12 (SMM) - Shanghai nonferrous metals closed mixed in day trading. On the macro front, the US dollar index dropped overnight, and the Chinese financial data exceeded expectations. The probability of hiking rates at the US Fed’s May meeting was around 70%, and the market awaits for the US inflation data which will be released tonight.

SHFE copper added 0.45%, aluminium fell 0.27%, lead rose 0.07%, zinc dipped 0.36%, tin gained 0.27%, and nickel increased 2.61%.

Copper: SHFE 2305 copper closed up 310 yuan/mt or 0.45% at 68,860 yuan/mt. The open interest dropped 1,601 lots to 167,373 lots.

The spread between the front-month and next-month contracts narrowed today, and the cargo holders became less willing to ship. The spot traders restocked on dips. With the delivery of SHFE 2304 copper approaching in the next two trading days, whether the spot prices can be maintained at a small premium will depend on the fluctuation in the SHFE copper spread.

Aluminium: SHFE 2305 aluminium closed down 50 yuan/mt or 0.27% at 18,415 yuan/mt. The open interest declined 8,307 lots to 181,649 lots.

On the macro front, as the US inflation data is to be released, the market expects the Fed to raise interest rates. On the fundamentals, in the second quarter of 2023, domestic aluminium supply continues to rise slowly and the demand also gradually recovers. As such, aluminium ingots inventory continues to decline and the short-term aluminium prices may remain volatile. It is necessary to continue to pay attention to the power supply in Yunnan and the Fed's interest rate hikes.

Lead: SHFE 2305 lead closed up 10 yuan/mt or 0.07% at 15,280 yuan/mt. The open interest decreased 2,046 lots to 44,049 lots.

SHFE lead prices rebounded, while the spot supply stood low. The spot market saw fewer quotes from traders near the delivery of the SHFE 2304 lead, and some suppliers raised their quotations, while the downstream companies were cautious about restocking. Traders were interested in buying spots under warrants. The small order transactions were sluggish. The most-traded SHFE lead contract will move rangebound in the short term on a stable macro front.

Zinc: SHFE 2305 zinc dipped 80 yuan/mt or 0.36% to 21,955 yuan/mt. The open interest gained 2,324 lots to 107,991 lots.

Spot quotes remained firm today. The spots were mainly traded among traders as downstream companies restocked raw materials yesterday. The overall transactions weakened.

Tin: SHFE 2305 tin gained 520 yuan/mt or 0.27% to 190,770 yuan/mt. The open interest dropped 313 lots to 53,733 lots.

Nickel: SHFE 2305 nickel closed up 4,640 yuan/mt or 2.61% at 182,460 yuan/mt. The open interest fell 5,024 lots to 76,178 lots.

On April 12, premiums of Jinchuan nickel were 8,000-8,500 yuan/mt. The average premium stood at 8,250 yuan/mt, down 500 yuan/mt from the previous trading day. NORNICKEL nickel was quoted at premiums of 7,000-7,500 yuan/mt, with an average premium of 7,250 yuan/mt, down 250 yuan/mt from a day ago. Downstream demand picked up slightly, but the spot premiums fell amid the rising futures prices. Nickel briquette prices were 184,800-186,100 yuan/mt, an increase of 4,450 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.]