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SMM Evening Comments (May 22): Shanghai Nonferrous Metals Closed Mostly with Losses on Rebound in US Dollar

iconMay 22, 2023 18:00
Shanghai nonferrous metals closed mostly with losses in day trading. 

SHANGHAI, May 22 (SMM) - Shanghai nonferrous metals closed mostly with losses in day trading. Last Friday, US Fed Chairman Powell took part in a panel discussion titled "Monetary Policy Perspectives" in Washington, D.C., at which Powell expressed a dovish view. The market thus expected the US Fed to pause rate hikes in June. The US dollar index dropped accordingly but later rebounded to 103.3.

SHFE copper fell 0.49%, aluminium lost 1.23%, lead finished 0.13% higher, zinc slipped 1.77%, tin dropped 0.16%, and nickel added 1.81%.

Copper: SHFE 2307 copper fell 320 yuan/mt or 0.49% to 64,860 yuan/mt. The open interest gained 18,243 lots to 184,574 lots.

Social inventory in Shanghai added about 2,000 mt over the weekend, mainly due to the influx of imported goods. The spread between the front-month and next-month contracts rose to 190-240 yuan/mt in the backwardation structure, bringing opportunities for arbitrage traders, and there were few low-priced sources in the market. The inflow of imported copper into the market failed to suppress the spot premiums. On the contrary, some arbitrage traders wished to lower the quotes, dragging down the spot premiums. It is expected that it will be difficult for the spot premium to drop significantly tomorrow against the backdrop of the rising spread between the front-month and next-month contracts.

Aluminium: SHFE 2307 aluminium lost 225 yuan/mt or 1.23% to 18,005 yuan/mt. The open interest rose 27,108 lots to 214,713 lots.

On the macro level, the US debt ceiling negotiations have dragged on, exacerbating market panic and macro uncertainties. On fundamentals, end-user consumption is still recovering, but aluminium market is still oversupplied. Due to decline prebaked anode and coal prices, aluminium prices have no cost support. Aluminium prices may face downside risks due to headwinds from macro and fundamentals.

Lead: SHFE 2306 lead finished 20 yuan/mt or 0.13% higher at 15,375 yuan/mt. The open interest dipped 2,536 lots to 42,009 lots.

Zinc: SHFE 2306 zinc slipped 365 yuan/mt or 1.77% to 20,310 yuan/mt. The open interest decreased 11,558 lots to 67,052 lots.

The drop in zinc prices today stimulated the market trades. But some downstream companies still took a wait-and-see approach. 1# zinc ingot was traded between 20,430-20,540 yuan/mt.

Tin: SHFE 2306 tin dropped 310 yuan/mt or 0.16% to 197,450 yuan/mt. The open interest fell 5,821 lots to 43,251 lots.

The fall in tin prices slightly pushed up the spot trading today, and the trading volume was average.

Nickel: SHFE 2306 nickel added 2,950 yuan/mt or 1.81% to 166,310 yuan/mt. The open interest decreased 7,246 lots to 56,322 lots.

On May 22, premiums of Jinchuan nickel were 10,500-11,000 yuan/mt. The average premium stood at 10,750 yuan/mt, down 900 yuan/mt from the previous trading day. Premiums of NORNICKEL nickel stood at 7,000-7,500 yuan/mt. The average premium was 7,250 yuan/mt, an increase of 350 yuan/mt from the previous trading day. NORNICKEL nickel premiums grew on shrinking supply. Nickel briquette prices were 168,400-169,100 yuan/mt, an increase of 2,250 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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