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SMM Morning Comment For SHFE Base Metals January 19

iconJan 19, 2024 09:52
LME copper prices opened at $8270/mt overnight before reaching a low of $8245/mt and a high of $8320/mt, and closed at $8312/mt, a rise of 0.34%.

SHANGHAI, January 19 (SMM) – SHANGHAI, January 19 (SMM) –
LME copper prices opened at $8270/mt overnight before reaching a low of $8245/mt and a high of $8320/mt, and closed at $8312/mt, a rise of 0.34%. Trading volumes were 22,000 lots and open interest stood at 274,000 lots. The most active SHFE 2403 copper contract prices opened at 67580 yuan/mt and finished at 67690 yuan/mt last Friday evening, down 0.03%, with the low-end of 67380 yuan/mt and the high-end of 67790 yuan/mt. Trading volume was 32,000 lots, and open interest stood at 150,000 lots. The number of initial jobless claims in the United States in the week to January 13th recorded 187,000, a new low since the week of September 24, 2022. The solid labor force data suppressed market expectations for an interest rate cut by the Federal Reserve, and the U.S. index rose. In terms of fundamentals, from the supply side, warehouse receipts in Shanghai have gradually flowed into the market, and the supply of goods has increased compared with the previous few days. This has also dealt a blow to the premiums and discounts in the spot market, and supply is expected to remain relatively adequate in the near future; in terms of consumption, with copper prices and spot quotes weakening, downstream purchasing volume has increased to a certain extent, but pre-holiday stocking has not yet begun. It is expected that most companies will start stocking next week. Prices will remain at low levels in the near term.
Overnight, the most-traded SHFE 2403 aluminium contract opened at 18,745 yuan/mt, with high and low at 18,760 yuan/t and 18,665 yuan/mt before closing at 18,700 yuan/mt, down 65 yuan/mt or 0.35%. LME aluminum opened at $2,180/mt on Thursday, with high and low at $2,192.5/mt and $2,162/mt respectively before closing at $2,168/mt, a drop of $46/mt or 2.08%.
The macro front remained bearish last week . Although some domestic economic data released were better than expected, it was insufficient to offset the rapid cooling of expectations for interest rate cuts, which put pressure on aluminum prices. In terms of fundamentals, the disturbance in the alumina supply still existed, domestic aluminium smelters maintained stable operation, the amount of aluminium ingot produced was expected to increase MoM in January, and imported aluminium ingots may increase. In addition, the aluminium market may enter a traditional inventory accumulation amid low-season, but domestic aluminium ingot inventories continued to remain low. The shipment increased thanks to pre-holiday stockpiling. The domestic aluminium ingot has been destocked for more than a week, thus the total inventory before the holiday may be difficult to exceed level in the same period of 2023. In the short term, the macroeconomic data at home and abroad perform poorly, and domestic and overseas aluminum downstream industries are entering the off-season before the end of the year. SMM predicts that aluminum prices may be under pressure in the near future, and we will pay attention to the pace of the Federal Reserve's interest rate cuts, domestic consumption and inventory changes.
Nonferrous metals generally fell overnight, LME lead prices dropped [SMM Lead Morning Comment]
LME lead open at $2065/mt and went downward during the Asian trading hours yesterday, declining to $2049/mt during the European trading hours and reaching a high of $2080.5/mt. It finally dropped and closed at $2077.5/mt, up $20.5/mt or 1%.
The most-traded SHFE 2403 lead contract opened at 16220 yuan/mt and rose to the highest point at 16305 yuan/mt. SHFE lead fell slightly and finally closed at 16280 mt, up 65 yuan/mt or 0.40% overnight.
Domestic fundamentals have not changed, SHFE zinc moved range-bound [SMM Zinc Morning Comment]
LME zinc prices opened at $2474/mt last evening and closed down $0.5/mt or 0.02% at $2446/mt. Trading volume decreased to 10410 lots, and open interest decreased by 877 lots to 207,000 lots. LME zinc inventory decreased by 1575 mt or 0.77% to 204125 mt. The initial jobless claims in the United States last week hit a new low since the week of September 24, 2022. The labor market remains stable, weakening market expectations for an interest rate cut by the Federal Reserve.
The most active SHFE 2403 zinc opened at 20720 yuan/mt and fell 115 yuan/mt or 0.55% to close at 20740 yuan/mt trading with low level-end of 20665 yuan/mt and the an intraday high of 20765 yuan/mt. Trading volumes decreased to 37657 lots and open interest grew 915 lots to 90610 lots. Downstreams have begun to close one after another, the weak supply and demand situation of zinc ingots has not changed. Overseas macro bearish sentiment has not been fully digested. SHFE zinc maintained rangebound fluctuations.
SHFE 2402 tin contract fell to 211,920 yuan/mt and then rebounded overnight, before closing at 213,250 yuan/mt overnight, up 0.12%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as below. Small brand tin ingots were offered at discounts of 500 and premiums of 100 yuan/mt over SHFE 2402 tin contract, versus discounts of 200 to premiums of 700 yuan/mt for delivery brands, premiums of 600-1000 yuan/mt for Yunxi brand, and discounts of 700-1200 yuan/mt for imported brand tin ingots. Tin prices fell slightly yesterday, but downstream companies continued to take a wait-and-see stance. Yesterday’s spot market transactions remained sluggish.
Overnight, the most-traded SHFE nickel contract opened at 126,000 yuan/mt, and closed at 128,260 yuan/mt, up 1,230 yuan/mt. Trading volume rose 10,971 lots, and open interest decreased by 4,898 lots. On the macro front, given the US CPI data on Jan 11, the core CPI has declined, boosting commodities. In addition, the news of the suspension of intermediate products projects drove SHFE nickel prices upward. From a fundamental perspective, LME inventory destocked slightly by 72 mt yesterday, with Europe being the main driver. Nickel price is expected to be volatile.

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