SMM Evening Comments (Apr 21): Shanghai Nonferrous Metals Closed with Losses amid the Predicted Economic Recession

SHANGHAI, Apr 21 (SMM) - Shanghai nonferrous metals closed with losses in day trading.  US initial jobless claims were slightly higher than expected. The market players held diverged opinions on the US Fed rate hikes and predicted an economic recession in the future.
 

SHFE copper fell 1.18%, aluminium dipped 1.18%, lead lost 0.68%, zinc declined 0.75%, tin slip 2.75%, and nickel fell 2.74%

Copper: SHFE 2305 copper fell 820 yuan/mt or 1.18% to 68,660 yuan/mt. The open interest decreased 20,802 lots to 121,019 lots.

SHFE copper futures prices dropped to below 69,000 yuan/mt, stimulating downstream companies’ buying interest. Transactions of high-quality copper, hydro-copper and non-registered copper picked up. Spot prices of mainstream standard-quality copper were premiums of 0-30 yuan/mt, those of high-quality copper were premiums of 30-40 yuan/mt, and those of hydro-copper were discounts of 50-40 yuan/mt. Inquiries on low-priced spots were active.

Aluminium: SHFE 2306 aluminium dipped 225 yuan/mt or 1.18% to 18,890 yuan/mt. The open interest declined 24,948 lots to 265,810 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 2306 lead lost 105 yuan/mt or 0.68% to 15,290 yuan/mt. The open interest decreased 1,481 lots to 66,210 lots.

SHFE lead prices fell after surging. Spot lead prices dropped as the goods flowed into the market after the delivery of the SHFE 2305 lead. Refined lead prices were quoted at premiums, while the downstream companies purchased only on dips. The most-traded SHFE lead contract will move rangebound in the short term on a stable macro front.

Zinc: SHFE 2306 zinc declined 165 yuan/mt or 0.75% to 21,880 yuan/mt. The open interest rose 12,943 lots to 94,039 lots.

The spot premiums rose today. The arrivals in Shanghai were low, and the downstream companies made more purchases on falling zinc prices and the approaching Labour Day holiday. Besides, the bullish holders were less willing to ship at lows.

Tin: SHFE 2306 tin slip 6,000 yuan/mt or 2.75% to 212,550 yuan/mt. The open interest added 5,930 lots to 48,409 lots.

Nickel: SHFE 2306 nickel fell 5,220 yuan/mt or 2.74% to 185,200 yuan/mt. The open interest added 13873 lots to 86115 lots.

On April 21, premiums of Jinchuan nickel were 4,800-5,000 yuan/mt. The average premium stood at 4,900 yuan/mt, down 750 yuan/mt from the previous trading day. NORNICKEL nickel was quoted at premiums of 4,600-4,800 yuan/mt, with an average of 4,700 yuan/mt, down 950 yuan/mt from a day ago. NORNICKEL nickel premiums stood lower than Jinchuan nickel premiums today as some spot NORNICKEL nickel will flow into the Chinese market. The spot prices still stood high, and the downstream companies held a wait-and-see sentiment. Nickel briquette prices were 193,100-194,200 yuan/mt, down 4,400 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.]