SMM Evening Comments (Mar 4): Nonferrous metals on the SHFE fell across the board, nickel tumbled 6%

SHANGHAI, Mar 4 (SMM) – SHFE nonferrous metals all closed lower on Thursday March 4. Copper weakened 1.95%, aluminium dropped 1.64%, zinc plunged 3.3%, nickel tumbled 6%, lead fell 1.82% and tin slumped 3.55%.

SMM data showed that stocks of 6063 aluminium billet across the five major consumption areas – Foshan, Wuxi, Huzhou, Changzhou and Nanchang – in China rose 7,000 mt from the previous week to 246,300 mt as of March 4. Stocks dropped by 6,700 mt in Nanchang, but increased in other areas. Inventory buildup continued this week, but the rise narrowed, as the arrivals of cargoes were relatively low.

Social inventories of primary aluminium across eight consumption areas in China, including SHFE warrants, rose 91,000 mt on the week to 1.17 million mt as of March 4, and stocks in Wuxi, Nanhai and Gongyi mainly contributed to the increase.

Copper: The most-traded SHFE 2104 copper contract fell 1.95% to finish the day at 66,460 yuan/mt, with open interest decreasing 2,960 lots to 116,000 lots. Open interest of the May contract added 2,854 lots to 117,000 lots. 

US Treasury yields resumed their rise. The yields on the benchmark 10-year Treasury note and the 30-year Treasury bond climbed to their highest in the week. More investors are keeping a close watch on rising inflation.

Oil prices rose for a second straight session on Thursday, as the possibility that OPEC+ producers might decide against increasing output at a key meeting later in the day lent support alongside a drop in U.S. fuel inventories.

Aluminium: The most-liquid SHFE 2104 aluminium contract dropped 1.64% to end the day at 17,130 yuan/mt.

Zinc: The most-active SHFE 2104 zinc contract finished the day 3.3% lower at 20,970 yuan/mt, with open interest losing 919 lots to 78,236 lots. Domestic zinc concentrate is in short supply as zinc mines in high-altitude areas remain suspended, and mines in some regions postponed resumption due to the two sessions. Treatment charges maintained downward trend in Sichuan, Yunnan and Shaanxi, and was stable in Inner Mongolia. Smelters in Hunan and Guangxi intended to raise TCs as they had imported sufficient zinc concentrate previously. Domestic TCs are likely to decline further. Rising production costs will support zinc prices.

Nickel: The most-traded SHFE 2104 nickel contract tumbled by 6% to end the day at 130,490 yuan/mt.

Lead: The most-liquid SHFE 2104 lead contract declined 1.82% to finish the day at 15,105 yuan/mt after hitting a one-month low at 15,050 yuan/mt earlier in the session, with open interest decreasing 2,858 lots to 36,942 lots.  

Tin: The most-active SHFE 2104 tin contract slumped 3.55% to close the day at 173,200 yuan/mt, with open interest decreasing 1,663 lots to 12,300 lots, and it expected to move between 170,000-180,000 yuan/mt tonight.