SHANGHAI, Apr 19 (SMM) – LME and SHFE base metals closed mostly with gains overnight. On the macro side, China’s first-quarter GDP announced yesterday exceeded market expectations. Investors believed that China’s economic recovery was faster than expected. The U.S. dollar index fell as the Chinese economy recovered more than expected and strong UK wages data supported the pound.
Copper: LME copper prices closed at $9,002.5/mt overnight, a rise of 0.53%. Trading volumes were 10,000 lots and open interest stood at 257,000 lots. The most active SHFE 2305 copper contract finished at 69,760 yuan/mt overnight, up 0.17%. Trading volume was 20,000 lots and open interest stood at 1624,000 lots.
In terms of fundamentals, since the import window has not opened, the increase in the inflows of imported copper is limited. Sellers raised prices, but spot quotes will meet resistance as cargoes under warrants will be offered for sale. Although the copper prices dipped this week, they are still fluctuating at a high level. Given that end consumer demand is not strong, downstream processing companies mostly purchased as required. Domestic economic data bolstered copper prices, but the upside room is expected to be limited.
Aluminium: Overnight, the most-traded SHFE 2305 aluminium contract opened at 19,030 yuan/mt, and rose to 19,060 yuan/mt before closing at 19,020 yuan/mt, up 150 yuan/mt or 0.79%. LME aluminium opened at $2,377/mt on Tuesday and closed at $2,439.5/mt, up $26.5/mt or 2.82%.
As the Fed’s interest rate hike seems to be coming to an end, market focus has shifted onto market fundamentals. The domestic aluminium supply is growing slowly. There are rumours of power rationing on smelters in Yunnan. Market opinions split on whether the smelters in Yunnan will cut output or resume production in the future. The overall end demand continued to pick up, but it is still not as strong as expected. Aluminium ingots maintained the destocking cycle. Aluminium prices have climbed above 19,000 yuan/mt mark, but further rise depends on improving fundamentals.
Lead: Overnight, LME lead prices opened at $2,115/mt and closed at $2,148/mt after hitting the lowest point at $2,111.5/mt, and increase of 1.61%. The open interest decreased 98 lots to 104,000 lots and the trading volume decreased 3,472 lots to 3,997 lots.
Overnight, the most-traded SHFE 2306 lead contract opened at 15,390 yuan/mt and closed at 15,370 yuan/mt hitting the highest point at 15,395 yuan/mt, an increase of 0.29%. The open insterest increased 4,337 lots to 53,248 lots and the trading volume decreased 33,899 lots to 16,536 lots.
Zinc: Overnight, LME zinc opened at $2,832.5/mt and closed at $2,849.5/mt, up $14.5/mt or 0.51%. Trading volume stood at 4,881 lots, and open interest lost 3,192 lots to 172,000 lots. The market's varied views on the Fed's subsequent interest rate hikes gave rise to persisting bearish sentiment, which capped the growth of LME zinc prices.
The most-traded SHFE zinc 2305 opened at 22,355 yuan/mt and finally settled at 22,295 yuan/mt, down 100 yuan/mt or 0.45%. The trading volume was 61,000 lots, and open interest added by 5,186 lots to 70,800 lots. Although TCs for zinc concentrates keep falling recently, zinc smelters still gain healthy profits and remain active in restocking imported zinc concentrates. Therefore, the domestic zinc ingot supply will be sufficient, a sign of limited fundamental support for SHFE zinc prices.
Tin: SHFE 2305 tin contract rose rapidly to 224,670 yuan/mt after opening, then fell sharply to 224,660 yuan/mt and finally closed at 223,550 yuan/mt, up 0.52%.
In the spot market, SHFE tin prices rose but the spot transactions were still average. Most traders reported weak downstream demand. However, most traders said the transactions improved slightly compared to the previous day. The import profits once expanded to more than 3,000 yuan/mt yesterday, but then fell back to 42.86 yuan/mt in the afternoon.
Nickel：The spot NORNICKEL nickel supply was tight, driving up the premiums, while the Jinchuan nickel premiums stood lower. Orders received by the NPI plants grew. Spot transactions between traders and NPI plants have increased. Market players generally remained bullish. On the demand side, according to SMM research, spot prices of stainless steel once rose greatly yesterday, and the market saw frequent inquiries. However, the decline in the futures prices afterwards resulted in a slight drop in the spot quotes, and the transactions decreased. To sum up, spot nickel supply was tight amid the closed import window. Nickel prices may run with some upward potential.
[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.]
