SMM Evening Comments (Apr 19): Shanghai Nonferrous Metals Closed Mixed amid Hawkish Fed Remarks

SHANGHAI, Apr 19 (SMM) - Shanghai nonferrous metals closed mixed in day trading. On the macro front, the US dollar index fell overnight, however, some Fed officials issued hawkish remarks, saying that rate hikes should continue and that high rates should be maintained for a long time.
 

SHFE copper fell 0.24%, aluminium gained 0.85%, lead rose 0.46%, zinc stood flat, tin lost 1.51%, and nickel grew 4.20%.

Copper: SHFE 2305 copper fell 170 yuan/mt or 0.24% to 69,470 yuan/mt. The open interest dropped 9,551 lots to 155,142 lots.

The spot market did not see a large inflow of sources for warrant delivery. Some holders dumped their goods, while those who carried low inventory intended to raise their quotes. Afterwards, as the supply of low-priced goods in the market increased, some cargo holders had to lower their prices in order to secure a deal. The prices of high-quality copper stood almost flat from those of standard-quality copper.

Aluminium: SHFE 2306 aluminium gained 160 yuan/mt or 0.85% to 19,030 yuan/mt. The open interest added 45,862 lots to 242,124 lots.

As the Fed's interest rate hike seems to be coming to an end, market focus has shifted onto market fundamentals. The domestic aluminium supply is growing slowly. There are rumours of power rationing on smelters in Yunnan. Market opinions split on whether the smelters in Yunnan will cut output or resume production in the future. The overall end demand continued to pick up, but it is still not as strong as expected. Aluminium ingots maintained the destocking cycle. Aluminium prices have climbed above 19,000 yuan/mt mark, but further rise depends on improving fundamentals.

Lead: SHFE 2306 lead rose 70 yuan/mt or 0.46% to 15,395 yuan/mt. The open interest increased 10,230 lots to 59,141 lots.

The futures prices moved with some ups. Spot supply remained low. Holders focused on picking up of goods, and downstream companies were cautious about purchasing high-priced spots.  The most-traded SHFE lead contract will move rangebound in the short term on a stable macro front.

Zinc: SHFE 2305 zinc stood flat at 22,330 yuan/mt. The open interest decreased 5,195 lots to 78,608 lots.

Spot zinc prices remained volatile today. The spots were traded at the average price among traders, and transactions of spots quoted against the futures prices were rare. Some sources for warrant delivery flowed into the market, which has little impact on prices. Traders were less willing to ship at low prices, and downstream companies restocked on rigid demand.

Tin: SHFE 2305 tin lost 3,360 yuan/mt or 1.51% to 219,030 yuan/mt. The open interest dipped 808 lots to 52,578 lots.

In the early trading, spot quotes of deliverable brands stood almost unchanged from yesterday, while the discounts of small deliverable brands expanded significantly, with the lowest discount of 800 yuan/mt. As of the noon close, most traders said that the market transactions were still light, and the downstream companies were not willing to restock. However, the transactions of quotes at large discounts were better than yesterday.

Nickel: SHFE 2305 nickel grew 7,890 yuan/mt or 4.20% to 195,910 yuan/mt. The open interest added 7,942 lots to 75,413 lots.

On April 19, premiums of Jinchuan nickel were 5,800-6,000 yuan/mt. The average premium stood at 5,900 yuan/mt, down 250 yuan/mt from the previous trading day. NORNICKEL nickel was quoted at premiums of 5,800-6,000 yuan/mt, with an average of 5,900 yuan/mt, down 350 yuan/mt from the previous trading day. Spot nickel supply in China remained tight due to the import losses. Premiums of NORNICKEL nickel stood high today, and the prices were flat from those of Jinchuan nickel. Nickel briquette prices were 197,600-198,600 yuan/mt, an increase of 8,050 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.]