SMM Evening Comments (Apr 18): Shanghai Nonferrous Metals Closed Mixed amid Higher US Dollar Index and Solid Recovery of Chinese Economy

SHANGHAI, Apr 18 (SMM) - Shanghai nonferrous metals closed mixed in day trading. The US economic data cooled down, and the market expected the Fed to raise interest rates in May. The overnight US dollar index rebounded from 101.6 to 102.2, weighing on metals prices. China's first quarter GDP was recorded at an annual rate of 4.5%, higher than the expected value of 4% and higher than the previous reading of 2.9%. The Chinese economy showed signs of a solid recovery, which beefed up the metals prices.

SHFE copper fell 0.37%, aluminium added 1.31%, lead lost 0.07%, zinc declined 0.42%, tin surged 7.26%, and nickel grew 0.41%.

Copper: SHFE 2305 copper fell 260 yuan/mt or 0.37% to 69,780 yuan/mt. The open interest dipped 14,315 lots to 164,680 lots.

The futures prices dropped to around 69,500 yuan/mt, encouraging downstream purchases. The spot mainly saw low-priced transactions. The quotes of high-quality copper stood almost flat from those of mainstream standard-quality copper. The inflow of spots for warrant delivery may put some pressure on the spot premiums. The imports of copper cathode will decrease as the import window was closed. It is expected that some holders will still hold their quotes firm.

Aluminium: SHFE 2305 aluminium closed up 245 yuan/mt or 1.31% at 19,000 yuan/mt. The open interest added 649 lots to 173,335 lots.

The Fed’s interest rate hike seems to be coming to an end, but a deep economic recession has not yet arrived. The Chinese economy is recovering, 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 improving macro environment and slowing demand growth, aluminium prices should move rangebound in the short term.

Lead: SHFE 2305 lead lost 10 yuan/mt or 0.07% to 15,365 yuan/mt. The open interest dropped 7,773 lots to 34,045 lots.

SHFE lead prices moved sideways. Spot holders raised their quotes as supply in Jiangsu, Zhejiang and Shanghai stood low. During this period, traders picked up goods one after another, and the premiums varied in different markets. Downstream enterprises only purchased on rigid demand. Therefore, the spot trading volume was limited. The most-traded SHFE lead contract will move rangebound in the short term on a stable macro front.

Zinc: SHFE 2305 zinc declined 95 yuan/mt or 0.42% to 22,350 yuan/mt. The open interest dropped 5,289 lots to 83,715 lots.

The futures prices still stood high, suppressing the downstream. The traders were active in shipping cargoes. The average premium slumped to 0 yuan/mt, which still failed to boost transactions. The overall transaction was thin.

Tin: SHFE 2305 tin prices surged 15,080 yuan/mt or 7.26% to 222,700 yuan/mt. The open interest decreased 7,769 lots to 53,386 lots.

SHFE tin prices soared yesterday, but the downstream companies were less willing to pick up. Spot tin ingot trading was critically sluggish. The downstream sectors are expected to restock on rigid demand with the consumption of in-plant inventory of raw materials. However, the social inventory and invisible inventory of tin ingots are both high, and the domestic tin ingot supply is abundant.

Nickel: SHFE 2305 nickel grew 770 yuan/mt or 0.41% to 188,720 yuan/mt. The open interest fell 4,094 lots to 67,471 lots.

On April 18, premiums of Jinchuan nickel were 5,500-6,800 yuan/mt. The average premium stood at 6,150 yuan/mt, down 750 yuan/mt from the previous trading day. NORNICKEL nickel was quoted at premiums of 6,000-6,500 yuan/mt, with an average of 6,250 yuan/mt, down 500 yuan/mt from a day ago. The spot NORNICKEL nickel supply was tight, and the premiums remained firm. The Jinchuan nickel premiums stood lower. Nickel briquette prices were 189,500-190,600 yuan/mt, down 150 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.]