SMM Evening Comments (Feb 3): Shanghai Nonferrous Metals Closed Mostly with Losses on Strong US Dollar

SHANGHAI, Feb 3 (SMM) – Shanghai nonferrous metals closed mostly with losses as the US dollar was quite strong overnight. On the macro front, the US initial jobless claims for the week ending January 28 recorded 183,000, a new low since the week ending April 23, 2022. The European Central Bank raised all three major interest rates by 50 basis points, in line with market expectations. The euro weakened, boosting the US dollar. China's Caixin Services PMI recorded a higher than expected value of 52.9 in January, as the macro front still controlled the market direction.

SHFE copper fell 0.42%, aluminium edged down 0.13%, lead shed 0.23%, zinc lost 0.25%, tin dropped 0.55%, and nickel rose 0.45%.

Copper: The most-traded SHFE 2303 copper closed down 0.42% or 290 yuan/mt at 68,890 yuan/mt, with open interest down 7,013 lots to 166,505 lots.

In the spot market, the premiums dropped as a whole, and the existing transactions were generally trades purchasing on dips. Though SHFE copper kept falling recently, the downstream demand has not yet been fully boosted.

Aluminium: The most-traded SHFE 2303 aluminium closed down 0.13% or 25 yuan/mt at 19,095 yuan/mt, with open interest down 6,020 lots to 190,614 lots.

Optimism over consumption recovery is expected to continue to support SHFE aluminium. Market players need to closely monitor how the power rationing in Yunnan will develop.

Lead: The most-traded SHFE 2303 lead closed down 0.23% or 35 yuan/mt at 15,275 yuan/mt, with open interest down 2,695 lots to 74,245 lots.

In the spot market, the cargo holders quoted based on market dynamics, and the market prices changed little from a day ago. The quotations of secondary lead, however, were close to the break-even point, hence the smelters raised the offers, making secondary lead less attractive. In addition, the downstream players currently purchased on rigid demand as there still remained some raw material stocks stockpiled before the Chinese New Year holiday. The spot market picked up only slightly.

Zinc: The most-traded SHFE 2303 zinc closed down 0.25% or 60 yuan/mt at 24,105 yuan/mt, with open interest down 385 lots to 90,998 lots.

In the spot market, the successful trades were mostly between traders. In addition, the traders ramped up the purchases and most of which were in the form of long-term orders. The downstream players were less interest in purchasing.

Tin: The most-traded SHFE 2303 tin closed down 0.55% or 1,270 yuan/mt at 228,800 yuan/mt, with open interest down 2,044 lots to 30,410 lots.

In the spot market, the downstream demand remained weak, and the transactions failed to pick up as some players were still resuming the production. SHFE tin warrants inventory fell 10 mt to 6,582 mt.

Nickel: The most-traded SHFE 2303 nickel closed up 0.45% or 990 yuan/mt at 221,760 yuan/mt, with open interest up 1,342 lots to 79,296 lots.

In the spot market, Jinchuan nickel was in premiums of 6,500-7,500 yuan/mt, with an average of 7,000 yuan/mt, up 500 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 6,500-7,000 yuan/mt, with an average of 6,750 yuan/mt, down 50 yuan/mt on a daily basis. The spot prices changed little, and market inquiries weakened after SHFE nickel hit high in early trade. For nickel briquette, the prices stood between 226,000-227,000 yuan/mt, up 400 yuan/mt from the previous trading day.

[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.]