SMM Evening Comments (Feb 27): Shanghai Nonferrous Metals Closed Mostly with Losses on Mounting Rate Hike Odds

SHANGHAI, Feb 27 (SMM) – Shanghai nonferrous metals closed mostly with losses in day trading. On the macro front, US core PCE price index rose 4.7% YoY in January, which exceeded market expectations; especially, consumer spending recorded the largest gain since 2023, which may prolong the rate hike cycle. The market players are now betting on a 50bp rate hike in March.

SHFE copper fell 1.8%, aluminium slid 1.29%, lead edged up 0.03%, zinc declined 2.6%, tin shed 2.29%, and nickel lost 1.53%.

Copper: The most-traded SHFE 2304 copper closed down 1.8% or 1,250 yuan/mt at 68,300 yuan/mt, with open interest down 3,695 lots to 159,665 lots.

In the spot market, the spot premiums dropped after opening high, and then rebounded, while the spot transactions picked up after staying sluggish. Sources available in the spot market were mostly with next-month invoices, and prices of cargoes with front-month and next-month invoices showed a spread of 20-30 yuan/mt.

Aluminium: The most-traded SHFE 2304 aluminium closed down 1.29% or 240 yuan/mt at 18,375 yuan/mt, with open interest up 18,077 lots to 223,244 lots.

The social inventory of aluminium ingot has not yet entered a destocking cycle. High inventory suppressed the confidence of bulls to a certain extent. Coal price rose rapidly, and the cost side is expected to rise.

Lead: The most-traded SHFE 2304 lead closed up 0.03% or 5 yuan/mt at 15,345 yuan/mt, with open interest down 1,276 lots to 53,368 lots.

SHFE lead dropped from high today, and the cargo holders quoted based on market dynamics. The spot prices changed little from last Friday, but downstream demand dropped around month-end. The transactions of spot goods were poor.

Zinc: The most-traded SHFE 2304 zinc closed down 2.6% or 610 yuan/mt at 22,880 yuan/mt, with open interest up 3,297 lots to 96,406 lots.

Spot transactions improved palpably today as SHFE zinc dropped relatively significantly today, and some downstream players restocked on dips with rising market inquiries.

Tin: The most-traded SHFE 2303 tin closed down 2.29% or 4,870 yuan/mt at 207,560 yuan/mt, with open interest down 16,917 lots to 18,729 lots.

In the spot market, some smelters held the prices firm, while the traders were more active in making quotes. The spot prices of various refined tin brands rose slightly from last Friday. However, the falling SHFE tin price failed to boost downstream purchases.

Nickel: The most-traded SHFE 2304 nickel closed down 1.53% or 3,020 yuan/mt at 194,910 yuan/mt, with open interest up 10,001 lots to 77,121 lots.

In the spot market, Jinchuan nickel was in premiums of 5,500-6,000 yuan/mt, with an average of 5,750 yuan/mt, down 400 yuan/mt on a daily basis. NORNICKEL nickel was in premiums of 3,400-3,800 yuan/mt, with an average of 3,600 yuan/mt, down 300 uyan/mt. SHFE nickel and spot premiums both dropped on poor demand and shift of most-traded SHFE nickel contract, and the spot market was lacklustre today. For nickel briquette, the prices stood between 200,400-202,100 yuan/mt, down 650 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.]