SMM Evening Comments (Feb 1): Shanghai Nonferrous Metals with Gains on Improving Chinese Market Activities

SHANGHAI, Feb 1 (SMM) – Shanghai nonferrous metals closed with gains today. The US labour cost index recorded a quarterly rate of 1% in the fourth quarter, which has been falling for three consecutive quarters. Senior Fed officials said the Fed is expected to consider a pause in rate hikes after its March meeting. China's economic data performance in January was better, with January official PMI higher than the previous value and above the 50-point market, enhancing expectations on consumption recovery.

SHFE copper added 0.36%, aluminium rose 1.27%, lead climbed 0.26%, zinc inched up 0.16%, tin gained 0.47%, and nickel grew 1.82%.

Copper: The most-traded SHFE 2303 copper closed up 0.36% or 250 yuan/mt at 69,700 yuan/mt, with open interest up 348 lots to 176,168 lots.

The spot premiums simulated the moves in the previous two days, and dropped after opening high. The traded prices rose with expanding SHFE front-month and next-month spread in contango structure.

Aluminium: The most-traded SHFE 2303 aluminium closed up 1.27% or 240 yuan/mt at 19,150 yuan/mt, with open interest up 5,344 lots to 200,509 lots.

There are rumours of aluminium production cuts in Yunnan, triggering bullish sentiment in the aluminium market. This, coupled with expectations for consumption recovery, will keep aluminium prices firm.

Lead: The most-traded SHFE 2303 lead closed up 0.26% or 40 yuan/mt at 15,270 yuan/mt, with open interest up 563 lots to 82,955 lots.

In the spot market, the cargo holders were relatively less interest in making shipments, and the quotations changed little from a day ago. The inquiries from downstream players picked up slightly, but they still stood on the sidelines. The market stood still at present.

Zinc: The most-traded SHFE 2303 zinc closed up 0.16% or 40 yuan/mt at 24,440 yuan/mt, with open interest down 1,327 lots to 96,919 lots.

The spot transactions were weak as a whole today, mainly because constantly rising zinc price has contained downstream demand.

Tin: The most-traded SHFE 2303 tin closed up 0.47% or 1,100 yuan/mt at 236,550 yuan/mt, with open interest down 241 lots to 33,370 lots.

In the spot market, SHFE tin showed no clear directions, and downstream demand was muted. The transactions were poor as a whole as the players have not yet fully resumed the production. SHFE warrants inventory added 44 mt to 6,482 mt.

Nickel: The most-traded SHFE 2303 nickel closed up 1.82% or 4,020 yuan/mt at 225,410 yuan/mt, with open interest up 3,203 lots to 79,044 lots.

In the spot market, Jinchuan nickel was in premiums of 4,200-7,500 yuan/mt, with an average of 5,850 yuan/mt, down 2,650 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 7,000-7,500 yuan/mt, with an average of 7,250 yuan/mt, down 1,000 yuan/mt on a daily basis. SHFE nickel performed strongly today, and the spot transactions were muted amid high spot prices. Nonetheless, spot premiums fell as the upstream players were eager to sell. For nickel briquette, the prices stood between 229,100-229,600 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.]