SMM Evening Comments (Apr 26): Shanghai Nonferrous Metals Closed Mostly with Losses amid Worry about Economic Recession

SHANGHAI, Apr 26 (SMM) - Shanghai nonferrous metals closed mostly with losses in day trading. On the macro front, overseas bearish sentiment weighed on risky assets. Shares of First Republic Bank plunged again, raising recession fears.

SHFE copper closed down 1.09%, aluminium dipped 0.48%, lead gained 0.23%, zinc decreased 0.91%, tin slipped 2.14%, and nickel lost 1.93%.

Copper: SHFE 2306 copper closed down 740 yuan/mt or 1.09% at 67,430 yuan/mt. The open interest added 10,954 lots to 183,097 lots.

Near the Labour Day holiday, the plunge in copper futures further boosted downstream purchases, and spot holders were actively shipping. Recently, the inflow of imported copper has increased, suppressing spot premiums. The spot will be traded at small premiums tomorrow.

Aluminium: SHFE 2306 aluminium dipped 90 yuan/mt or 0.48% to 18,710 yuan/mt. The open interest decreased 19,432 lots to 240,533 lots.

On the macro level, the market generally expects the Fed to raise interest rates by 25 basis points at next week's meeting, but sluggish consumer confidence index and decline in US manufacturing industry data led to risk aversion. On the fundamentals, April is still the peak season for downstream consumption, and the domestic aluminium ingot social inventory remains in a destocking state. Although aluminium price has dropped below 19,000 yuan/mt, high prices still deterred buyers. Downstream buyers have not shown strong willingness to stock before the upcoming Labour Day holiday. And risk aversion may emerge before the holiday. As such, SHFE aluminium likely to move rangebound. It is necessary to continue to pay attention to whether smelters in Yunnan will curtail capacity.

Lead: SHFE 2306 lead gained 35 yuan/mt or 0.23% to 15,315 yuan/mt. The open interest grew 3,822 lots to 67,060 lots.

SHFE lead prices moved with some drops. Spot quotes offered by holders remained almost unchanged, while discounts of some goods from smelters expanded further. The downstream companies only restocked on rigid demand, with the procurement favouring low-priced sources. Small order transactions today decreased. With relatively stable macro sentiment, the most-traded SHFE lead prices will move rangebound in the short term.

Zinc: SHFE 2306 zinc decreased 195 yuan/mt or 0.91% to 21,260 yuan/mt. The open interest rose 206 lots to 122,632 lots.

The futures prices rose today, while the downstream companies were cautious about purchasing in fear of a further fall in the prices. Spot trading weakened today as downstream enterprises’ pre-holiday stockpiling is coming to an end.   

Tin: SHFE 2306 tin slip 4,540 yuan/mt or 2.14% to 208,090 yuan/mt. The open interest dropped 6,834 lots to 42,274 lots.

SHFE tin prices gradually rebounded, while market demand weakened. The majority of smelters said that they saw sporadic transactions. The downstream enterprises released some demand with the decline in tin prices.

Nickel: SHFE 2306 nickel lost 3,540 yuan/mt or 1.93% to 179,570 yuan/mt. The open interest dipped 9,297 lots to 74,187 lots.

On April 26, premiums of Jinchuan nickel were 4,000-4,200 yuan/mt. The average premium stood at 4,100 yuan/mt, down 150 yuan/mt from the previous trading day. NORNICKEL nickel was quoted at premiums of 3,000-3,500 yuan/mt, with an average of 3,250 yuan/mt, down 500 yuan/mt from a day ago. Today, the spot premiums of pure nickel continued to decline, slightly encouraging downstream purchases. Nickel briquette prices were 186,100-186,800 yuan/mt, down 3,100 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.]