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SMM Evening Comments (May 18): Shanghai Nonferrous Metals Closed with Gains on Decreased Risk Aversion Sentiment

iconMay 18, 2023 18:00
Shanghai nonferrous metals closed with gains in day trading.

SHANGHAI, May 18 (SMM) - Shanghai nonferrous metals closed with gains in day trading. The US made substantial progress on the debt ceiling issue, and an agreement would be reached before the end of this week. The one-year CDS fell to 155 basis points from 164 basis points on Monday, and the five-year CDS dropped to 69 basis points from 72 basis points. Market risk aversion has eased, and metals prices generally closed up today.

SHFE copper ended up 2.21%, aluminium climbed 1.12%, lead gained 0.76%, zinc grew 1.52%, tin added 2.00%, and nickel rose 0.60%

Copper: SHFE 2306 copper ended up 1,420 yuan/mt or 2.21% to 65,760 yuan/mt. The open interest dipped 11,651 lots to 159,084 lots.

Spot premiums grew apace on low market supply after the delivery of the SHFE 2305 copper, and the traded price hit the highest of the year of premiums of around 400 yuan/mt. SMM believes that the spot premiums will be manipulated by cargo holders tomorrow if the imported spots do not flow into the domestic market.

Aluminium: SHFE 2306 aluminium climbed 205 yuan/mt or 1.12% to 18,475 yuan/mt. The open interest fell 17,905 lots to 153,586 lots.

The negotiations on the US debt ceiling are speeding up, and an agreement may be reached this week. Market is expecting an extension of US debt ceiling, but the US economic downside risk remains high. Fundamentals: The domestic operating aluminium capacity continued to increase in May. In terms of cost, the average 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. However, with the rapid decline in global aluminium ingot inventories, the risk of overseas short squeeze has increased. Rising spot premiums in east China should support SHFE aluminium prices. 

Lead: SHFE 2306 lead gained 115 yuan/mt or 0.76% to 15,305 yuan/mt. The open interest decreased 5,663 lots to 43,703 lots.

Zinc: SHFE 2306 zinc grew 315 yuan/mt or 1.52% to 20,995 yuan/mt. The open interest lost 6,135 lots to 87,902 lots.

Spot premiums rose slightly today amid cargo holders’ intention to quote higher and the expanded backwardation structure of the SHFE zinc contract.

Tin: SHFE 2306 tin added 3,940 yuan/mt or 2.00% to 200,860 yuan/mt. The open interest declined 3,437 lots to 45,625 lots.

SHFE tin prices rebounded today. The spot premiums fell slightly in early trading, boosting some purchases. But later, when the spot prices rebound, the transactions became slack. Many traders said that the overall spot trades decreased today, and only traders who quoted lower gained more deals than the previous trading day. SHFE tin warrant inventory lost 149 mt to 8,568 mt.
Nickel: SHFE 2306 nickel closed up 990 yuan/mt or 0.60% at 165,450 yuan/mt. The open interest declined 7,947 lots to 66,066 lots.

On May 18, premiums of Jinchuan nickel were 10,900-11,500 yuan/mt. The average premium stood at 11,200 yuan/mt, flat from the previous trading day. NORNICKEL nickel was quoted at premiums of 6,000-6,800 yuan/mt, with an average of 6,400 yuan/mt, down 350 yuan/mt from a day ago. The spot premiums dropped slightly today on expanding supply. Nickel briquette prices were 168,600-168,900 yuan/mt, an increase of 800 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.]

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