SHANGHAI, Mar 28 (SMM) - LME and SHFE base metals closed with gains last night. On the macro front, USD/JPY rose to a relative high yesterday, as the authorities tried to curb concerns about the global banking system, which helped to ease market tensions. The market turned to risky assets, and the US dollar index fell.
Copper: LME copper prices closed at $8,989/mt overnight, a rise of 0.49%. Trading volumes were 12,000 lots and open interest stood at 249,000 lots. SHFE 2305 copper contract finished at 69,400 yuan/mt overnight, up 0.33%. Trading volume was 27,000 lots, and open interest stood at 169,000 lots.
On the macro front, USD/JPY rose to a relative high yesterday, as the authorities tried to curb concerns about the global banking system, which helped to ease market tensions. The market turned to risky assets, and the US dollar index fell. On the fundamentals, As of March 27, copper stocks in Chinese markets tracked by SMM dipped 7,700 mt from last Friday to 192,300 mt, down 4,300 mt from 196,600 mt pre-CNY, and down 137,600 mt from a high post-CNY. This is still up 50,100 mt from the same period last year. The decrease in inventories in various regions over the weekend is mainly due to the fact that there is not much customs clearance of imported copper, and more domestic copper was sent directly to downstream enterprises. Meanwhile, consumption has also remained stable, and purchases have not decreased significantly. With the lack of solid macroeconomic data, copper prices will return to the fundamentals. It is expected that the slow recovery of consumption will give copper prices some support.
Aluminium: The most-traded SHFE 2305 aluminium contract opened at 18,520 yuan/mt overnight, with its high and low at 18,585 yuan/mt and 18,520 yuan/mt before closing at 18,575 yuan/mt, up 95 yuan/mt, or 0.51%.
LME aluminium opened at $2,341/mt on Monday, with its high and low at $2,372/mt and $2,323/mt respectively before closing at $2,365/mt, an increase of $21/mt or 0.9%.
On the macro level, the pace of the Fed's interest rate hike seems to be slowing down, adding to market uncertainty. On the fundamentals, despite a slight recovery on the production side, domestic aluminium ingot social inventory continued to fall as downstream consumption continued to pick up. The short-term aluminium prices may go up, driven by improving fundamentals. However, macro uncertainty should be closely watched.
Lead: Yesterday, the LME cash to three month lead contract fluctuated sideways and fell, but then rose rapidly and finally closed at $2,137/mt, up 0.78%.
SHFE 2305 lead contract rose rapidly after opening, but quickly fell quickly to the lowest point at $15,450 yuan/mt and closed at 15,445 yuan/mt, up 0.23%.
Zinc: Overnight, LME zinc touched a low of $2,862/mt and then rallied to close at $2,911/mt, up $17.5/mt or 0.6%. LME zinc inventory remained unchanged at 39,650 mt.
SHFE zinc slipped slightly after opening in overnight trading but then kept rising and settled at 22,670 yuan/mt, up 125 yuan/mt or 0.55%. So far, the fundamentals of domestic zinc are stable. SHFE zinc prices have great potential to increase with the support of low inventory. Market players are suggested to wait and see before the risk aversion was completed digested.
Nickel: On the supply side, due to favourable macro factors, nickel futures prices have edged higher recently. Spot prices fell on the month-end factor. In terms of NPI, frequent news of production reduction and shutdown of stainless steel mills were bearish for NPI prices. As the stainless steel mills are about to purchase intensively, the traded price disclosed next time is very important. The news will have a certain impact on the market participants. On the demand side, according to SMM research, the stainless steel futures prices went up last Friday. The spot transactions improved slightly over the weekend driven by market sentiment. But spot trading became slack yesterday, and the prices will fall further. Short-term stainless steel spot prices will be stable with occasional falls. In general, the pure nickel sector faces weak supply and demand. SMM presumes the recent nickel prices will remain rangebound.
[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.]
