SHANGHAI, May 9 (SMM) – LME market was closed yesterday, and SHFE base metals closed mixed last night. On the macro front, the dollar inched higher against a basket of currencies yesterday, shrugging off earlier weakness, as the market shifted attention from an unsurprising survey of lending conditions to other economic data that could provide new clues for the Federal Reserve's rate hike path. Additionally, inflation data due later this week could provide clues to the outlook for US interest rates.
Copper: The most active SHFE 2306 copper contract finished at 67,640 yuan/mt overnight, up 0.91%. Trading volume was 23,000 lots, and open interest stood at 182,000 lots.
On the fundamentals, as of Monday May 8, SMM copper inventory across major Chinese markets fell 700 mt from two Fridays ago but increased 45,900 mt from the same period last year. The big inventory decline in Shanghai is due to limited shipments arrivals over the weekend and active shipments leaving warehouses in east China amid tight copper scrap supply. Inventories in Guangdong grew for two consecutive weeks as smelters preferred to make deliveries to warehouses. In terms of consumption, after the sharp drop in copper prices, the orders of downstream processing companies have not improved significantly, and the overall demand has not changed much. The liquidity crisis in the US banking industry has limited the upward momentum of copper prices, and copper prices are expected to remain relatively low in the short term.
Aluminium: At last night’s night session, the most-traded SHFE 2306 aluminium contract opened at 18,415 yuan/mt, with the highest and lowest prices at 18,485 yuan/mt and 18,395 yuan/mt, before closing at 18,410 yuan/mt, down 20 yuan/mt or 0.27%.
On the macro front, the uncertainties over US debt default and liquidity risks and the concerns over an economic recession or slowdown still weighed on the aluminum prices. In terms of fundamentals, aluminium billets inventory is at its highest level in the same period in the past three years, while the inventory of aluminum ingots has been in a downward trend. It is expected that the persisting low inventory of aluminium ingots will continue to underpin aluminum prices.
On the whole, SMM expects that aluminium prices will face downward risks due to recent bearish factors, but the decline will be limited thanks to the support of low inventory.
Lead: Overnight, the most-traded SHFE 2306 lead contract opened at a high of 15,300 yuan/mt and closed at 15,270 yuan/mt, a decrease of 0.13%. Its open interest increased 597 lots to 61,274 lots compared to the previous trading day, while trading volume decreased 27,837 lots to 13,911 lots.
Zinc: The most active SHFE zinc 2306 contract opened at 21,535 yuan/mt overnight and closed up 10 yuan/mt or 0.05% at 21,455 yuan/mt. Trading volume was down to 35,042 lots, and the open interest narrowed by 2,203 lots to 110,000 lots
The zinc ingot social inventory in China added by 6,900 mt as of May 8, while SMM data shows that domestic refined zinc output in April stood at 540,000 mt, and the forecast for May is 559,800 mt. The supply has peaked within in the year, but the consumption remains poor. The growing risk aversion sentiment prompted capitals to leave the market. Nevertheless, the stable macro sentiment will keep zinc prices consolidating in the near term.
Tin: Yesterday, the SHFE 2306 tin contract prices quickly pulled up to a high point at 214,950 yuan/mt and then fell and closed at 212,600 yuan/mt, up 2.13%.
In the spot market, due to the decline in tin prices at the beginning of the session, transactions were halved yesterday compared to last Friday. And the overall trading market was relatively cold.
In addition, according to information from the Indonesian Trade Ministry: Indonesia exported 7,268.9 mt of tin ingots in April 2023, up 52% MoM and down 21% YoY. Among which, 2,478.2 mt were exported to China, up 52% MoM and accounting for about 34% of all exports; 1,198.3 mt were exported to Singapore, up 134% MoM, accounting for about 14%. It is expected that China’s tin ingot imports in April will remain high, but may fall in May as the import losses maintained at 2,000-3,000 yuan/mt.
Nickel: SHFE nickel prices moved rangebound yesterday. The downstream companies were less willing to restock spots after the Labour Day holiday. NPI holders who gain certain profits were not in a hurry to ship their goods on the low market supply. On the demand side, the spot prices of stainless steel in the Wuxi and Foshan markets rose somewhat yesterday, resulting in average spot trades. HRC quotes grew further in the afternoon. In addition, affected by the price decrease in ferromolybdenum and the lower purchase prices offered by stainless steel mills within the day, the spot prices of #316L dropped sharply. In general, the low spot supply at home and abroad continues to support nickel prices. SHFE nickel will move 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.]
