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SMM Evening Comments (May 25): Shanghai Nonferrous Metals Closed Mostly with Losses amid a Bearish Macro Front

iconMay 25, 2023 18:00
Shanghai nonferrous metals closed mostly with losses in day trading. 

SHANGHAI, May 25 (SMM) - Shanghai nonferrous metals closed mostly with losses in day trading. Although there is no substantial progress in the US debt ceiling negotiations at this stage, an agreement has been reached that there will be no default. The debt ceiling may not be adjusted, but the principal and interest will be paid first. This will avoid technical defaults, but It will still cause some negative effects. For example, the US credit rating may be lowered; recently. US Fed officials have frequently released hawkish remarks, and the US dollar index rebounded to a nearly two-month high as a result. Base metals prices generally dropped today amid bearish macro factors.

SHFE copper lost 0.77%, aluminium dipped 0.40%, lead fell 0.07%, zinc dropped 2.13%, tin gained 2.17%, and nickel surged 3.08%.

Copper: SHFE 2307 copper lost 490 yuan/mt or 0.77% to 63,460 yuan/mt. The open interest gained 8,683 lots to 214,592 lots.

The decline in the futures prices was attractive to the downstream sectors, and the spot premiums rose to above 150 yuan/mt. The inflow of some imported copper has not yet pushed up the market supply.

Aluminium: SHFE 2307 aluminium dipped 70 yuan/mt or 0.40% to 17,650 yuan/mt. The open interest added 10,567 lots to 268,425 lots.

On the macro level, the debt ceiling negotiations have failed to reach an agreement for now, adding to macro uncertainty. The US Fed swings on whether to raise interest rate or not. Consumption recovery is weaker than expected. Falling prebaked anode and coal prices weakened cost support to aluminium prices. SHFE aluminium may hover around 18,000 yuan/mt in the short term.

Lead: SHFE 2307 lead fell 10 yuan/mt or 0.07% to 15,270 yuan/mt. The open interest gained 307 lots to 54,483 lots.

Spot holders held their quotes firm, but the buyers only restocked on dips. The overall transactions were better today. The most-traded SHFE lead contract will hover around 15,200 yuan/mt in the short term on a stable macro front.

Zinc: SHFE 2307 zinc dropped 415 yuan/mt or 2.13% to 19,050 yuan/mt. The open interest rose 7,629 lots to 147,470 lots.

With the arrival of imported spots, the premiums of imported goods in China fell. Domestic spot premiums, on the other hand, stood stable on low market supply.

Tin: SHFE 2306 tin closed up 4,220 yuan/mt or 2.17% at 199,050 yuan/mt. The open interest lost 4,498 lots to 28,806 lots.

Nickel: SHFE 2306 nickel surged 5,060 yuan/mt or 3.08% to 169,080 yuan/mt. The open interest declined 2,687 lots to 38,451 lots.

On May 25, premiums of Jinchuan nickel were 10,500-10,800 yuan/mt. The average premium stood at 10,650 yuan/mt, down 500 yuan/mt from the previous trading day. NORNICKEL nickel was quoted with premiums of 7,500-7,500 yuan/mt, with an average of 7,500 yuan/mt, flat from a day ago. NORNICKEL nickel premiums rose further on shrinking market supply. SMM presumes that the supply tightness will not be eased until next week. Nickel briquette prices were 167,900-169,400 yuan/mt, an increase of 2,350 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.]

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