SHANGHAI, Apr 10 (SMM) - SHFE base metals closed mostly with gains last Friday night, while LME was closed for Good Friday. On the macro front, non-farm sector in the United States added 236,000 jobs in March, and the average hourly wages in March, which reflect inflation, also rose. The market expected that the Fed may have to raise interest rates next month, and the U.S. index rose.
Copper: The LME is closed today due to the Easter holiday. SHFE 2305 copper contract finished at 68,850 yuan/mt last Friday, up 0.32%. Trading volume was 13,000 lots, and open interest stood at 164,000 lots.
On the fundamentals, as of Friday April 7, SMM copper inventories in major Chinese markets decreased 3,900 mt from last Monday to 202,300 mt, up 400 mt from two Fridays ago. This is up 5,700 mt from pre-CNY level, a growth of two consecutive weeks. Active downstream stockpiling last week's end accelerated destocking in east China. Inventories in Guangdong slightly increased by 200 mt to 50,800 mt compared with last Monday, with shipments arrivals and leaving Guangdong basically the same. Downstream purchasing enthusiasm is not high. In terms of prices, the macroeconomic performance of various countries have slowed down, and spot demand is relatively stable. The market optimism has supported copper prices. It is expected that copper prices will remain high.
Aluminium: At last Friday’s night session, the most-traded SHFE 2305 aluminium contract opened at 18,695 yuan/mt, with its lowest and highest prices at 18,675 yuan/mt and 18,730 yuan/mt before closing at 18,720 yuan/mt, up 40 yuan/mt or 0.21%. The LME was closed last Friday for Good Friday.
On the macro level, although US non-farm payrolls released last Friday night dropped, unemployment rate data showed that the labour market was resilient, intensifying expectations for the Fed to raise interest rates. The domestic aluminium supply is estimated to maintain an upward trend in the second quarter. How the power supply situation in Yunnan will evolve deserves close attention. SMM predicts that the operating aluminium capacity in Yunnan will barely change in the foreseeable future. The demand is still expected to pick up, and aluminium ingot inventory is expected to maintain destocking cycle. With supply and demand both increasing, aluminium prices may fluctuate rangebound.
Lead: Last Friday, the London Metal Exchange was closed for Good Friday.
On the evening of last Friday, the most-traded SHFE lead 2305 lead contract opened at 15,290 yuan/mt and hit a high of 15,315 yuan/mt, but then fell slightly and finally closed at 15,290 yuan/ton, a drop of 0.03%. The open interest fell 1,336 lots from the previous trading day to 549,956 lots.
Zinc: LME was closed last Friday on Good Friday, while the released non-farm payrolls were within expectations.
At last Friday’s night session, the most-traded SHFE 2305 zinc contract opened higher at 22,220 yuan/mt and closed at 22,340 yuan/mt, up 255 yuan/mt or 1.15%. This marked an increase in SHFE zinc prices for three straight days. Trading volume was reduced to 39,122 lots, and open interest lost 2,053 lots to 104,000 lots.
Fundamentally, SMM weekly zinc concentrate TCs were lowered by 50 yuan/mt last week, suggesting that the ore supply remained tight. But the operating rates of downstream enterprises also weakened as a whole due to the Qingming Festival. The unclear relationship between supply and demand will leave SHFE zinc prices rangebound.
Nickel：A number of macro data released last week fell short of expectations, hence the SHFE nickel prices fluctuated wildly. On the evening of April 5, the US March ADP employment report showed that private payrolls added 145,000 in March, which was far lower than the previous reading of 242,000 and lower than the predicted figure of 200,000. On April 6, the US Department of Labour announced that the initial jobless claims were 228,000 in the week ended April 1, higher than the forecast of 200,000. The above data showed a weak US job market and also indicated that the US non-farm data released last Friday night might not be optimistic. Moreover, the US banking crisis reflected that the US financial system was in danger in the context of the rate hikes. The market thus worried about the future US economic recession, which had a negative effect on nonferrous metal prices.
In 2023, electrowinning nickel companies begin to produce finished products with nickel sulphate, and the NPI market is in a supply surplus, which affects the factors contributing to nickel price change. The break-even point of nickel sulphate produced with nickel briquettes supports the nickel prices, while the profit margin of electrowinning nickel produced with nickel sulphate puts a certain pressure on the prices. Nickel sulphate demand from the new energy sector may not be optimistic until mid-2023, which may weigh on the prices. Profit margins of electrowinning nickel will bounce back on stable refined nickel prices or bullish macro and fundamental factors, which will boost the electrowinning nickel production. In the long run, the electrowinning nickel output is expected to grow, and the nickel prices will fall further.
[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.]
