SHANGHAI, Apr 7 (SMM) - LME and SHFE base metals closed mostly with losses last night. On the macro front, the market is weighing how the key U.S. employment data released during the holiday break may affect the Fed's policy and will lead to market volatility. Affected by the weak economic data in the United States previously released, the market is worried about the slowdown of the economy.
Copper: LME copper prices closed at $8,861.5/mt last evening, up 0.94%. Trading volume was 19,000 lots and open interest stood at 250,000 lots. The most active SHFE 2305 copper contract finished at 68,530 yuan/mt overnight, down 0.12%. Trading volume was 35,000 lots and open interest stood at 163,000 lots.
In terms of fundamentals, the continuous inflow of imported copper recently has had a certain impact on the spot prices in both the east China and the south China market. In addition, during the domestic Qingming Festival holiday, the non-farm data released by the United States intensified the market's concerns about economic recession, and copper prices fell sharply. However, the downstream market did not replenish a large amount of goods, lowering spot quotes. In terms of consumption, although the market optimism remains, according to the upstream and downstream industries, the overall transaction is still relatively light. In terms of prices, the market is waiting for the release of US employment data. Copper prices rebounded slightly last night after falling. It is expected that copper prices will remain weak in the near future.
Aluminium: At Thursday's night session, the most-traded SHFE 2305 aluminium contract opened at 18,545 yuan/mt, with its lowest and highest at 18,535 yuan/mt and 18,620 yuan/mt before closing at 18,785 yuan/mt, flat from the previous trading day
LME aluminium opened at $2,342/mt on Thursday, with its high and low at $2,367/mt and $2,327/mt respectively before closing at $2,340/mt, a drop of $0.5/mt or 0.02%.
The LME will be closed this Friday and next Monday for holidays. Fears of overseas recession is still a potential negative factor, but domestic consumption has shown resilience. From the perspective of inventory, aluminium ingot stocks have been in a downward trend. In terms of downstream sectors, except for the weak performance of aluminium alloy sector, operating rates in the rest of downstream processing sectors are expected to maintain a slight increase in the short term. On the whole, in the absence of disruptios on the supply side, domestic consumption can still give some support to aluminium prices, which are expected to hover sideways in the short term.
Lead: Overnight, LME lead opened at $2,104.5/mt and fell to $2,089.5/mt as market’s expectations of economy recession. But driven by the increasing SHFE lead prices, LME lead prices stopped falling and rebounded, and finally closed at $2,119/mt, an increase of 0.52%. The London Stock Exchange is closed today.
Overnight, the most-traded SHFE 2305 lead contract opened at 15,220 yuan/mt and increased to 15,325 yuan/mt amid falling warrant inventory, but then gradually fell as the long-short game intensified, and finally closed at 15,285 yuan/mt, an increase of 0.39%. The open interest decreased 583 lots to 52,514 lots.
Zinc: LME zinc opened at $2,808/mt overnight, touching a low of $2,775.5/mt, and then rebounded to close at $2,804/mt, a loss of $3/mt or 0.11%. Transaction volume rose to 7,778 lots, and open interest added by 2,588 lots to 175,000 lots. LME zinc inventory remained flat. LME zinc prices posted a 6-day losing streak.
Overnight, the most-traded SHFE 2305 zinc contract opened at 22,045 yuan/mt and closed at 22,090 yuan/mt, down 10 yuan/mt or 0.05%. Trading volume was reduced to 47,573 lots, and open interest gained by 2,569 lots to 106,000 lots.
The worries about economic recession brought about by US employment data still put pressure on zinc prices. The growth rate of China’s real estate sales from January to February saw an increase of 2.3% year-on-year, followed by a year-on-year increase of 17.9% in March. The peak consumption season can still bolster zinc prices. However, SMM data shows that domestic refined zinc output in March was 556,800 mt and is expected to remain high in April. As such, traders should be wary of risks on the supply side.
Nickel：SHFE nickel prices continued to decline in the morning session yesterday, and the spot prices were on the wane. Stainless steel mills also pushed for lower purchase prices of NPI, but there is still a mass of NPI inventory stored in the warehouses, be it domestic or Indonesian. It is thus still necessary to pay attention to whether traders will sell off to increase capitals that may drive down the prices.
On the demand side, according to SMM research, the spot transactions of cold-rolled and hot-rolled stainless steel remained weak. The downstream companies, who were less willing to replenish their inventory, still held low inventory, but the drop of total social inventory was slow. To sum up, the weak demand still weighed on nickel prices.
[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.]
