SMM Evening Comments (Apr 28): Shanghai Nonferrous Metals Closed Mixed on Bets for a 25-basis-point Fed Rate Hike in May

SHANGHAI, Apr 28 (SMM) - Shanghai nonferrous metals closed mixed in day trading. On the macro front, the market panic has eased. In the first quarter of this year, the real GDP of the US grew at an annual rate of 1.1%, which was significantly lower than market expectations, and the core PCE rose 4.9% year-on-year in the first quarter of this year, which was higher than expected and was the biggest year-on-year increase in 2023.  The market believed that the Fed would raise the rate by 25 basis points at the May meeting.
 

SHFE copper gained 0.96%, aluminium dipped 0.54%, lead fell 0.20%, zinc grew 0.24%, tin added 2.04%, and nickel closed up 1.30%.

Copper: SHFE 2306 copper gained 640 yuan/mt or 0.96% to 67,410 yuan/mt. The open interest lost 10,911 lots to 176,108 lots.

SHFE copper climbed to above 67,000 yuan/mt. Spot market supply remained tight as the downstream companies ended the pre-Labour Day stockpiling. In such a context, the cargo holders raised their spot quotes and only a small number of traders shipped at lows to win deals. Downstream purchases grew amid the upcoming holiday, supporting the spot prices to remain at a small premium. SMM believes that after the Labour Day holiday, the spot will still be quoted at premiums. It is necessary to pay attention to the inflow of imported copper.

Aluminium: SHFE 2306 aluminium dipped 100 yuan/mt or 0.54% to 18,470 yuan/mt. The open interest dropped 11,234 lots to 212,237 lots.

On the macro level, various data show that the U.S. economy is likely to slow down in the second half of this year or even fall into recession, and the impact of bank financial risks persists. On fundamentals, this week's aluminium ingot inventory and aluminium billet inventory both declined. The operating rate of leading aluminium downstream processing companies continued to pick up, but may drop after the Labour Day holiday. Downstream enterprises did not show strong interest in stocking up before the holiday. As the Labour Day holiday approaches, more funds may leave the market. Therefore, SHFE aluminium may face downward pressure. Market should pay close attention to whether market demand will recover after the holiday and possible supply cuts in Yunnan.

Lead: SHFE 2306 lead fell 30 yuan/mt or 0.20% to 15,255 yuan/mt. The open interest dropped 2,368 lots to 61,231 lots.

SHFE lead prices moved with drops. Spot transactions were sluggish. Fewer holders offered quotes, and the downstream companies were ready to take the Labour Day holiday. Traders were reluctant to pick up goods. The most-traded SHFE lead contract will move rangebound in the short term on a stable macro front.

Zinc: SHFE 2306 zinc grew 50 yuan/mt or 0.24% to 21,280 yuan/mt. The open interest decreased 6,902 lots to 113,683 lots.

On the last trading day before the Labour Day holiday, the spot trades decreased significantly. Traders offered quotations randomly. The downstream companies have basically completed their stockpiling and purchased goods cautiously amid the rising spot prices.
 

Tin: SHFE 2306 tin added 4,240 yuan/mt or 2.04% to 212,380 yuan/mt. The open interest dropped 3,650 lots to 48,634 lots.

Nickel: SHFE 2306 nickel closed up 2,340 yuan/mt or 1.30% at 182,320 yuan/mt. The open interest dipped 2,480 lots to 65,877 lots.

On April 28, premiums of Jinchuan nickel were 3,500-4,000 yuan/mt. The average premium stood at 3,750 yuan/mt, down 350 yuan/mt from the previous trading day. NORNICKEL nickel was quoted at premiums of 2,000-2,500 yuan/mt, with an average premium of 2,250 yuan/mt, down 400 yuan/mt from a day ago. Spot suppliers were active in shipping at the month-end, and the supply of imported pure nickel grew, dragging down spot premiums. Nickel briquette prices were 190,300-191,700 yuan/mt, an increase of 4,500 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.]