SMM Evening Comments (Feb 16): Shanghai Nonferrous Metals Closed Mostly with Losses on Mounting Rate Hike Expectations

SHANGHAI, Feb 16 (SMM) – Shanghai nonferrous metals closed mostly with losses in day trading. On the macro front, the US retail sales in January rose 3% YoY, the largest increase in two years, alluding resilience in US consumption and stubbornly high inflation. As such, expectations on further rate hikes increased, and the US dollar rebounded.

SHFE copper declined 0.49%, aluminium edged down 0.03%, lead fell 0.46%, zinc shed 1.02%, tin gained 0.27%, and nickel slid 1.08%.

Copper: The most-traded SHFE 2303 copper closed down 0.49% or 340 yuan/mt at 68,510 yuan/mt, with open interest down 8,957 lots to 136,161 lots.

Falling SHFE copper price today appealed the downstream players in the spot market. Looking ahead, the 2023 long-term orders will be performed soon, and the traders are bound to purchase actively on dips. However, the mainstream traded prices are unlikely to drop to the level acceptable to the traders. The trading market is likely to remain flat for several days.

Aluminium: The most-traded SHFE 2303 aluminium closed down 0.03% or 5 yuan/mt at 18,485 yuan/mt, with open interest down 5,462 lots to 170,536 lots.

On the fundamentals, the long-awaited output reduction has not been enforced. And the social inventory has kept rising. The market is waiting to see when the demand will show strong recovery. It is expected that aluminium prices will remain rangebound in the short term.

Lead: The most-traded SHFE 2303 lead closed down 0.46% or 70 yuan/mt at 15,155 yuan/mt, with open interest up 2,992 lots to 61,450 lots.

The cargo holders were more active in making shipments today when SHFE lead dropped, and the downstream players purchased on dips, while sources from smelters were more popular. The overall transactions were moderate.

Zinc: The most-traded SHFE 2303 zinc closed down 1.02% or 235 yuan/mt at 22,880 yuan/mt, with open interest down 2,408 lots to 79,093 lots.

Downstream players still purchased on rigid demand amid sufficient in-plant stocks and bearishness on zinc prices, though SHFE zinc dropped today. Nonetheless, the transactions picked up slightly after traders lowered their offers.

Tin: The most-traded SHFE 2303 tin closed up 0.27% or 570 yuan/mt at 213,430 yuan/mt, with open interest down 9,070 lots to 47,180 lots.

In the spot market, the smelters made quotations as usual. The spot prices rose slightly in morning trade. The spot transactions, however, were poor according to the traders.

Nickel: The most-traded SHFE 2303 nickel closed down 1.08% or 2,230 yuan/mt at 205,000 yuan/mt, with open interest down 5,932 lots to 57,598 lots.

In the spot market, Jinchuan nickel was in premiums of 7,800-8,000 yuan/mt, with an average of 7,900 yuan/mt, up 250 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 5,300-5,500 yuan/mt, with an average of 5,400 yuan/mt, up 50 yuan/mt on a daily basis. SHFE dropped today as US retail sales in January beat expectations. The absolute spot prices of pure nickel dropped nearly 3,500 yuan/mt, while the transactions and inquiries were moderate today. For nickel briquette, the prices stood between 207,500-208,100 yuan/mt, down 3,700 yuan/mt from a day ago.

[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.]