SMM Evening Comments (Apr 20): Shanghai Nonferrous Metals Closed Mixed amid Hawkish US Fed

SHANGHAI, Apr 20 (SMM) - Shanghai nonferrous metals closed mixed in day trading. Citigroup pushed back its forecast for the start of a US recession from the third quarter to the fourth quarter. Recently, the US Fed officials have been hawkish. The market believed that the US Fed would be more likely to raise the rate in May. Besides, the US dollar index fell after surging.
 

SHFE copper dipped 0.36%, aluminium gained 1.03%, lead grew 0.20%, zinc lost 1.41%, tin fell 0.43%, and nickel rose 0.20%.

Copper: SHFE 2305 copper dipped 250 yuan/mt or 0.36% to 69,350 yuan/mt. The open interest dropped 13,321 lots to 141,821 lots.

Spot prices were quoted at discounts today, and the market mainly saw low-priced transactions. Spot prices of mainstream standard-quality copper were premiums of 30-40 yuan/mt, those of high-quality copper were premiums of about 40-50 yuan/mt, and those of hydro-copper were discounts of 50 yuan/mt. Traded prices of mainstream standard-quality copper were premiums of 10-20 yuan/mt. Near 11:00 a.m., some cargo holders further lowered their quotation of mainstream standard-quality copper to discounts of 20 yuan/mt, attracting some transactions.

Aluminium: SHFE 2306 aluminium gained 195 yuan/mt or 1.03% to 19,205 yuan/mt. The open interest rose 48,634 lots to 290,758 lots.

As the Fed’s interest rate hike seems to be coming to an end, market focus has shifted onto market fundamentals. In the current aluminium market, both supply and demand are growing. The supply increase was mainly contributed by Guizhou and Sichuan. Yet, smelters in Yunnan are still at risk of power rationing. The overall end demand continues to pick up, but it is still not as strong as expected. The bigger-than-expected decline in aluminium ingot inventory will support aluminium prices. Aluminium prices have climbed above 19,000 yuan/mt, but continued rise depends on further improvement of fundamentals.

Lead: SHFE 2305 lead grew 30 yuan/mt or 0.20% to 15,410 yuan/mt. The open interest added 8,550 lots to 67,691 lots.

Warrant inventories fell 10,770 mt to 24,410 mt, benefiting lead prices. However, the spot trading was slack as the downstream companies were more 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 lost 315 yuan/mt or 1.41% to 22,065 yuan/mt. The open interest decreased 6,653 lots to 71,955 lots.

The spot transactions improved today. There were fewer spot arrivals in the market, greatly pushing up the premiums. Some downstream enterprises began to restock for the Labour Day holiday and purchased on dips.

Tin: SHFE 2305 tin fell 950 yuan/mt or 0.43% to 219,490 yuan/mt. The open interest lost 10,474 lots to 42,104 lots.

Some spot suppliers shipped at large discounts in the early trading. Discounts for small medium-sized brands stood at 800-500 yuan/mt, and those for imported spots were 700-400 yuan/mt. Quotes offered by many smelters also drop, and only a few companies quoted at highs. The spot trading remained average. According to some traders and companies, the market witnessed no transactions as of the noon close. On April 20, the SHFE warrant inventory grew 125 mt to 8,287 mt.

Nickel: SHFE 2305 nickel gained 390 yuan/mt or 0.20% to 195,680 yuan/mt. The open interest dropped 12,663 lots to 62,750 lots.

On April 20, premiums of Jinchuan nickel were 5,500-5,800 yuan/mt. The average premium stood at 5,650 yuan/mt, down 250 yuan/mt from the previous trading day. NORNICKEL nickel was quoted at premiums of 5,500-5,800 yuan/mt, with an average of 5,650 yuan/mt, down 250 yuan/mt from the previous trading day. Spot trading remained sluggish since NORNICKEL nickel supply was tight and the prices were flat from those of Jinchuan nickel. Nickel briquette prices were 197,600-198,500 yuan/mt, down 50 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.]