SMM Evening Comments (May 23): Shanghai Nonferrous Metals Closed with Losses as US Fed Hinted 2 More Rate Hikes

SHANGHAI, May 23 (SMM) - Shanghai nonferrous metals closed with losses in day trading. On the macro front, the US dollar index closed up slightly overnight. US Fed's Bullard made hawkish remarks, saying that the current inflation was still too high, and believed that there were two more rate hikes. In addition, he pointed out that although the job market had slowed down, but this did not mean that the US economy was headed for recession.
 

SHFE copper lost 1.37%, aluminium dipped 0.86%, lead fell 0.52%, zinc slipped 3.38%, tin declined 3.27%, and nickel dropped 2.43%.

Copper: SHFE 2307 copper lost 890 yuan/mt or 1.37% to 64,220 yuan/mt. The open interest rose 8,881 lots to 193,455 lots.

Spot premiums stood high, which exceeded the fixed price of long-term orders signed by some downstream companies. The downstream enterprises thus restocked spots on rigid demand. The inflow of some imported goods failed to suppress the spot premiums in China. The spread between the front-month and next-month contracts stood stably at 200 yuan/mt in the backwardation structure as the spot for warrant delivery flowed into the spot market. Arbitrage traders were still keeping a close eye on the spread, so the spot premiums hovered around 200 yuan/mt.

Aluminium: SHFE 2307 aluminium dipped 155 yuan/mt or 0.86% to 17,965 yuan/mt. The open interest rose 5,521 lots to 220,234 lots.

On the macro level, the US debt ceiling negotiations have failed to reach an agreement for now, adding to macro uncertainty. End-user consumption is still recovering, but aluminium supply remains in a surplus. Falling prebaked anode and coal prices weakened cost support to aluminium prices. Macro headwinds and poor fundamentals will expose the short-term aluminium prices to downside risks.

Lead: SHFE 2306 lead fell 80 yuan/mt or 0.52% to 15,305 yuan/mt. The open interest dropped 10,230 lots to 31,779 lots.

Zinc: SHFE 2307 zinc slipped 690 yuan/mt or 3.38% to 19,695 yuan/mt. The open interest gained 17,468 lots to 137,735 lots.

Spots were traded at the SMM average premiums amid the growing supply of imported zinc ingot, but the traders were unwilling to ship at lows, dragging down the overall premiums.

Tin: SHFE 2306 tin fell 6,530 yuan/mt or 3.27% to 192,940 yuan/mt. The open interest gained 779 lots to 44,030 lots.

Spot trades improved today. Transactions of high-priced spots were slack, while those of low-priced sources were better.

Nickel: SHFE 2306 nickel dropped 4,050 yuan/mt or 2.43% to 162,500 yuan/mt. The open interest decreased 6,026 lots to 50,296 lots.

On May 23, premiums of Jinchuan nickel were 10,500-11,000 yuan/mt. The average premium stood at 10,750 yuan/mt, flat from the previous trading day. NORNICKEL nickel was quoted with premiums of 7,000-7,500 yuan/mt, with an average of 7,250 yuan/mt, flat from a day ago. Nickel prices have fluctuated in recent days on shrinking supply. But the suppliers were more active in shipping their spots near the month-end. Nickel briquette prices were 169,700-170,500 yuan/mt, an increase of 1,350 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.]