SMM Evening Comments (May 17): Shanghai Nonferrous Metals Closed Mixed amid Worry about Economic Recession and a Possible Fed Rate Hike

Published: May 17, 2023 18:00

Source: SMM

Save

Shanghai nonferrous metals closed mixed gains in day trading.

SHANGHAI, May 17 (SMM) - Shanghai nonferrous metals closed mixed gains in day trading. The US dollar index closed up slightly. Some US Fed officials made hawkish remarks, expressing their hope to reduce inflation and support for a further rate hike if necessary. Data released by the US Census Bureau yesterday showed that retail sales in the US rose by 0.4% month-on-month in April, lower than market expectations of 0.8%. While US consumption is supported by a buoyant labour market, concerns about an economic downturn remain.

SHFE copper lost 0.39%, aluminium added 1.24%, lead ended up 0.10%, zinc climbed 0.14%, tin slipped 0.10%, and nickel plunged 1.04%.

Copper: SHFE 2306 copper lost 250 yuan/mt or 0.39% to 64,550 yuan/mt. The open interest fell 11,749 lots to 170,735 lots.

The intraday spot transactions continued to improve, and the overnight drop in copper futures prices also attracted some downstream buyers to restock, pushing the spot premiums up to over 200 yuan/mt. Besides, the spot supply remained tight as the sources for warrant delivery did not flow into the market.

Aluminium: SHFE 2306 aluminium added 225 yuan/mt or 1.24% to 18,375 yuan/mt. The open interest lost 11,283 lots to 171,469 lots.

US interest rate hike expectations still exist. There are growing fears of US economic recession. There are many macro uncertainties.

Fundamentals: The domestic operating aluminium capacity continued to increase in May. In terms of cost, the price of SMM prebaked anodes plunged month-on-month in May, and the power cost of smelters with captive power plants also declined. Demand is lower than expected, and new orders at downstream enterprises are weak. Overseas demand for aluminium semis is not good. Consumption will hardly improve in May. Aluminium ingot inventories continue to fall, but inventory of billets and other intermediate aluminium products is still on the rise. It is expected that short-term aluminium prices will fall, but downside room will be limited due to low inventories.

Lead: SHFE 2306 lead ended up 15 yuan/mt or 0.10% to 15,215 yuan/mt. The open interest fell 3,091 lots to 49,366 lots.

Zinc: SHFE 2306 zinc climbed 30 yuan/mt or 0.14% to 20,850 yuan/mt. The open interest declined 7,691 lots to 94,022 lots.

Overall, the tightness of the spot supply intensified, which, coupled with the low futures prices, enabled the holder to quote high. However, the downstream demand was average. Therefore, spot trading did not improve today.

Tin: SHFE 2306 tin slipped 200 yuan/mt or 0.10% to 199,370 yuan/mt. The open interest decreased 2,372 lots to 49,062 lots.

As SHFE tin prices trended lower, the downstream companies were more active in restocking. As a result, the spot trades improved compared with the previous two trading days.
Nickel: SHFE 2306 nickel plunged 1,730 yuan/mt or 1.04% to 165,300 yuan/mt. The open interest lost 1,692 lots to 74,013 lots.

On May 17, premiums of Jinchuan nickel were 10,900-11,500 yuan/mt. The average premium stood at 11,200 yuan/mt, up 50 yuan/mt from the previous trading day. Premiums of NORNICKEL nickel stood at 6,500-7,000 yuan/mt. The average premium was 6,750 yuan/mt, an increase of 250 yuan/mt from the previous trading day. The spot nickel premiums rose on shrinking supply in the market. Nickel briquette prices were 167,700-168,200 yuan/mt, down 3,650 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.]

Spot market Futures market Market review

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or to learn more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

15 mins ago

Copper Prices Drop Below 96,000 Yuan/mt, Prompting Increased Orders and Higher Processing Fees

【SMM Copper Cathode Rod Flash News】Copper prices pulled back sharply and fell below the 96,000 yuan/mt mark, prompting downstream enterprises to engage in concentrated procurement, while new orders received by copper cathode rod enterprises increased significantly starting from the night session. To manage the pace of taking orders, enterprises raised processing fees one after another; meanwhile, due to the surge in order volumes and concerns over downstream cargo pick-up progress, some enterprises have already increased deposits to control risks.

15 mins ago

25 mins ago

Copper Prices Pulled Back, Stimulating Downstream Purchasing Enthusiasm; Destocking Accelerated, but Suppliers Sold on Strength, and Spot Premiums Rose First and Then Came Under Pressure [SMM Shanghai Spot Copper]

[SMM Shanghai Spot Copper] During the day, the SHFE copper 2604 contract extended its decline, with the trading range falling further to 95,500-96,000 yuan/mt. The center of copper prices kept moving lower, significantly stimulating downstream enterprises' demand to buy the dip and restock, while spot market trading sentiment clearly recovered. Demand side, according to SMM, most downstream enterprises saw a surge in order volumes, with a substantial increase from the previous period, and end-user cargo pick-up enthusiasm also improved in tandem. The pullback in copper prices became more attractive to enterprises, and purchase willingness to buy the dip was strong. Suppliers held prices firm accordingly, driving a notable rebound in spot premiums in early trading. Supply side, social inventory destocked sharply by 24,200 mt from Monday, and the pace of destocking accelerated. The rebound in spot premiums raised suppliers' willingness to sell, leading to more warrants flowing into the market. As premiums reached the psychological expectations of some suppliers, selling of spot warrants began to emerge, easing the previously tight spot supply situation and causing spot premiums to decline later. Overall, current copper prices have become more attractive to downstream enterprises, and faster destocking supports the spot market, but suppliers' selling at high levels combined with changes in the price spread between futures contracts structure put pressure on premiums. Under the tug-of-war between sellers and buyers, Shanghai spot copper is expected to remain in a tug-of-war pattern tomorrow, with premiums likely to stay in the discount range.

25 mins ago

1 hour ago

Increase in Order Intake of Enamelled Copper Wire Enterprises

SMM: Copper prices fell today, with the center dropping below 96,000 yuan/mt. Downstream orders were active, and enamelled wire enterprises saw a marked increase in order intake.

1 hour ago