SMM Evening Comments (Mar 2): Shanghai Nonferrous Metals Closed Mixed on Rate Hike Concerns and Strong Economic Recovery Expectations

SHANGHAI, Mar 2 (SMM) – Shanghai nonferrous metals closed mixed today. On the macro front, the market expects the US Fed to raise the interest rate to 5.5%. In addition, the U.S. February ISM manufacturing PMI recorded 47.7, a mild improvement. The Federal Reserve’s rate meeting minutes show that three state-level Fed Bank committees suggested to raise the rate by 50 basis points in January, including the Cleveland Fed, the St. Louis Fed and the Minneapolis Fed board members. In China, the market is quite bullish ahead of the Two Sessions meeting.

SHFE copper rose 0.16%, aluminium added 0.54%, lead fell 0.23%, zinc grew 0.96%, tin shed 0.75%, and nickel lost 3.02%.

Copper: The most-traded SHFE 2304 copper closed up 0.16% or 110 yuan/mt at 69,780 yuan/mt, with open interest down 111 lots to 154,676 lots.

In the spot market, the spot transactions picked up, and the spot discounts narrowed palpably compared with a few days ago.

Aluminium: The most-traded SHFE 2304 aluminium closed up 0.54% or 100 yuan/mt at 18,650 yuan/mt, with open interest down 9,701 lots to 195,704 lots.

On the fundamentals, the short-term supply side will remain stable as the aluminium capacity resumption in Sichuan and Guizhou has been rather slow. On the demand side, downstream purchases picked up after aluminium prices rebounded yesterday. The consumption recovery and inventory change are of concerns in the follow-up stage.

Lead: The most-traded SHFE 2304 lead closed down 0.23% or 35 yuan/mt at 15,285 yuan/mt, with open interest up 1,753 lots to 55,667 lots.

LME lead dropped today amid spreading fears over US rate hike rhetoric, which also weighed on SHFE lead. In the spot market, the cargo holders quoted based on market dynamics, and mostly offered small discounts. The spot market supply differed from north to south China, and downstream players mostly purchased on rigid demand.

Zinc: The most-traded SHFE 2304 zinc closed up 0.96% or 225 yuan/mt at 23,545 yuan/mt, with open interest down 2,738 lots to 87,271 lots.

The market transactions remained poor today amid high zinc prices, and both downstream players and traders refrained from buying.

Tin: The most-traded SHFE 2304 tin closed down 0.75% or 1,550 yuan/mt at 204,810 yuan/mt, with open interest up 5,977 lots to 68,422 lots.

In the spot market, the spot prices of some non-mainstream refined tin brands were flat from yesterday amid supply tightness though SHFE tin dropped today, while quotations of deliverable brands dropped slightly. The downstream players, however, rarely made inquiries today according to the traders, and mainly purchased on rigid demand.

Nickel: The most-traded SHFE 2304 nickel closed down 3.02% or 5,870 yuan/mt at 188,180 yuan/mt, with open interest up 6,250 lots to 86,550 lots.

In the spot market, the spot pure nickel was quoted against SHFE 2304 today. The premiums of Jinchuan nickel stood at 7,000-7,500 yuan/mt, with an average of 7,250 yuan/mt, down 1,000 yuan/mt from the previous trading day. The premiums of NORNICKEL nickel were 4,800-5,200 yuan/mt, with an average 5,000 yuan/mt, down 350 yuan/mt. SHFE nickel dropped palpably today amid news about the pricing of NORNICKEL nickel and SHFE nickel, and the spot premiums also dropped today, which boosted the transactions to some extent. For nickel briquette, the prices stood between 192,000-192,600 yuan/mt.

[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.]