SMM Evening Comments (Apr 17): Shanghai Nonferrous Metals Closed with Gains amid Possible Fed Rate Hike in May

SHANGHAI, Apr 17 (SMM) - Shanghai nonferrous metals closed with gains in day trading. US March retail sales recorded a monthly rate of -1%. The data showed a further slowdown in the US economy, raising market's expectations for a rate hike in May. The US dollar index rebounded slightly to around 101.5.

SHFE copper rose 0.16%, aluminium added 0.40%, lead grew 0.72%, zinc gained 0.58%, tin soared 12.00%, and nickel climbed 2.84%.

Copper: SHFE 2305 copper closed up 110 yuan/mt or 0.16% at 70,170 yuan/mt. The open interest fell 5,915 lots to 178,995 lots.

After the delivery of the SHFE 2304 copper, spot premiums rose. Recently, the copper prices have rebounded to more 69,000 yuan/mt, suppressing the downstream companies' buying interest. The copper premiums can hardly rise after the delivery.

Aluminium: SHFE 2305 aluminium added 75 yuan/mt or 0.40% to 18,770 yuan/mt. The open interest dipped 2,028 lots to 172,676 lots.

On the macro level, market was betting that the US Fed would pause interest rate hike amid growing fears of US economic recession, boosting the aluminium market. On fundamentals, domestic aluminium supply is growing slowly, and power supply situation in Yunnan deserves close attention. Aluminium ingots maintained the destocking cycle. In view of mixed macro front and slowing demand growth, aluminium prices should move rangebound in the short term. 

Lead: SHFE 2305 lead grew 110 yuan/mt or 0.72% to 15,390 yuan/mt. The open interest dropped 1,340 lots to 41,818 lots.

SHFE lead soared, and most of the holders shipped actively. Many downstream companies picked up goods, and some restocked on rigid demand. Some companies bought spots when the prices were on the rise. The spot trading was active today. The most-traded SHFE lead contract will move rangebound in the short term on a stable macro front.

Zinc: SHFE 2305 zinc gained 130 yuan/mt or 0.58% to 22,470 yuan/mt. The open interest dropped 5,610 lots to 88,966 lots.

Zinc futures prices hovered at highs today. After the delivery of SHFE 2304 zinc, the traders mainly shipped their goods, but the downstream enterprises restocked on rigid demand amid high spot quotes. The overall transaction was thin.

Tin: SHFE 2305 tin added 23,430 yuan/mt or 12.00% to 218,700 yuan/mt. The open interest increased 12,548 lots to 61,155 lots.

Downstream companies bought spots on rigid demand in the first half of last week, and the social inventory of tin ingots dropped 397 mt to 10,488 mt. Last week, the average operating rate of smelters in Yunnan and Jiangxi was 55.31%, flat from the previous week. Most smelters maintained normal production. A smelter in Yunnan shut down for maintenance earlier last week, and the time for subsequent production resumption is yet to be determined.

Nickel: SHFE 2305 nickel grew 5,250 yuan/mt or 2.84% to 189,830 yuan/mt. The open interest declined 2,002 lots to 71,565 lots.

On April 17, premiums of Jinchuan nickel were 6,800-7,000 yuan/mt. The average premium stood at 6,900 yuan/mt, up 50 yuan/mt from the previous trading day. NORNICKEL nickel was quoted at premiums of 6,500-7,000 yuan/mt, with an average premium of 6,750 yuan/mt, down 400 yuan/mt from a day ago. Recently, SHFE nickel prices have continued to grow. The spot premiums of NORNICKEL nickel were firm, and the price difference between the Jinchuan nickel and NORNICKEL nickel was narrow. The intraday spot nickel transactions were poor. Nickel briquette prices were 189,700-190,700 yuan/mt, an increase of 800 yuan/mt from the previous trading day. The nickel briquette 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.]