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 for 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

6 hours ago

Yingkou Jianfa Shenghai Phase I 300,000 mt Copper Cathode Project Smelting Furnace Starts Production, Pyrometallurgy System Enters Furnace Drying Stage

At 9:58 on September 12, the core smelting furnace of the pyrometallurgy system at Yingkou Jianfa Shenghai Nonferrous Metals & Chemicals Co., Ltd.'s multi-metal recovery project was successfully ignited, officially entering the furnace drying stage and marking a key step toward full-line commissioning and production. Public information shows that the Yingkou Jianfa Shenghai polymetallic complex gold-silver ore comprehensive recovery technology upgrade, relocation, and expansion project uses copper concentrates as its main raw material, with an overall planned capacity of 600,000 mt/year of copper cathode to be built in two phases, with capacity of 300,000 mt/year in each phase. Phase I is designed to produce 300,000 mt/year of copper cathode and 1.18 million mt/year of sulphuric acid, along with supporting systems for smelting, converting, anode refining, electrolysis, slag beneficiation, and precious metal recovery. After this ignition, the project will carry out standardized furnace drying and hot-state integrated trial runs across the entire system to verify equipment, instruments, interlocks, and automatic control systems. The project has not yet formally started raw material feeding and production; after furnace drying and system commissioning are completed, it will further advance the commissioning of Phase I's 300,000 mt/year copper cathode capacity. If the project is successfully brought into production, it is expected to increase copper smelting capacity in North China and further boost domestic demand for copper concentrate raw materials.

6 hours ago

22 hours ago

Alchemy Resources Starts Drilling Copper-Gold Targets at Yellow Mountain

Alchemy Resources announced on September 11 that reverse-circulation drilling has commenced across its Yellow Mountain and Overflow projects in New South Wales, Australia, with up to 15 holes planned during the latest exploration campaign. At the 80%-owned Yellow Mountain project, drilling will test extensions to previously identified copper-gold and polymetallic mineralisation, as well as two previously undrilled geophysical targets. Previous drilling at Yellow Mountain returned an intersection of 113 metres grading 1.17% copper equivalent, comprising 0.33% copper, 0.37 g/t gold, 24.3 g/t silver, 0.86% lead and 1.23% zinc. The latest drilling campaign is designed to test whether the known mineralised system extends into newly identified target areas. The program will also include drilling at the Overflow project, where Alchemy is targeting extensions to existing mineralisation along strike and at depth. Overflow currently hosts an inferred mineral resource of approximately 342,000 ounces of gold equivalent and contains gold, silver, copper, lead and zinc mineralisation. The commencement of drilling provides a near-term test of the scale and continuity of mineralisation at Yellow Mountain. The previously reported broad copper-gold-polymetallic intersection indicates potential for a sizeable mineralised system, while the newly defined geophysical targets provide additional exploration upside. Drilling results will be important in determining whether the mineralised footprint can be materially expanded.

22 hours ago

Freeport CEO Signals Likely Go-Ahead for $4.5 Billion Bagdad Copper Expansion

Freeport-McMoRan Chief Executive Officer Kathleen Quirk has indicated that the company expects to move forward with the proposed expansion of its Bagdad copper mine in Arizona, marking a stronger commitment to the project ahead of a formal investment decision. Speaking at the Jefferies Global Industrials Conference on September 10, Quirk said the project still requires input from Freeport's board but that she expects the company will proceed. She described the expansion as a roughly three-year construction project and noted that no major permitting hurdles are expected. Freeport's latest project estimates put capital expenditure for the Bagdad expansion at approximately US$4.5 billion, around 30% above the previous US$3.5 billion estimate, reflecting cost escalation, scope changes and additional engineering. The project would more than double concentrator capacity at Bagdad and is expected to add approximately 200–250 million lb, or around 91,000–113,000 tonnes, of copper production annually, alongside an additional 10–12 million lb of molybdenum. Bagdad currently has a reserve life exceeding 80 years. Freeport's Q2 2026 regulatory filing had described the project as being prepared for a potential investment decision during the second half of 2026. The latest comments therefore represent a more positive signal from management on the likelihood of development, although formal board approval has not yet been announced. A decision to proceed with Bagdad would represent one of Freeport's most significant near-term copper growth investments in the US. The potential addition of more than 90,000 tonnes per year of copper would materially increase Freeport's US output, although first production would remain several years away given the expected construction period. Attention will now turn to formal board approval and a final investment decision.

22 hours ago