SHANGHAI, Jun 7 (SMM) – Shanghai nonferrous metals mostly closed with losses as market worries over inflation slightly pushed up US dollar index, while the ambiguous recovery of the demand side in China also rattled the nerves of investors.

Shanghai copper fell 0.38%, aluminium lost 0.98%, lead added 1.51%, zinc shed 1.58%, tin slid 1.45%, and nickel dropped 0.31%.

Copper: The most-traded SHFE 2207 copper closed down 0.38% or 280 yuan/mt at 72,460 yuan/mt, with open interest up 1,340 lots to 149,533 lots.

On the macro front, the market’s worries over high inflation pushed up US Treasury note yield, and US dollar index rallied slightly, resulting in narrow risk appetite. Non-ferrous metals prices were pressured.

The port efficiency has picked up, and the robust foreign trade market boosted the consumption of copper. The spot premiums, however, slumped today with some even halved as the incident of multiple pledges of aluminium ingot stocks in a warehouse is still fermenting. The overall market transactions were muted. Meanwhile, the constantly inflow of imported copper concurred with slower-than-expected recovery of demand, pulling down the spot premiums.

Aluminium: The most-traded SHFE 2207 aluminium closed down 0.98% or 205 yuan/mt to 20,730 yuan/mt, with open interest down 4,716 lots to 175,338 lots.

In the spot market, the transactions were still slack, and traders kept selling off though downstream buyers stood on the sidelines. As such, spot discounts expanded. On the other hand, though the market has strong expectations for demand recovery, the actual process was slow, which failed to offer support to aluminium prices.

Lead: The most-traded SHFE 2207 lead closed up 1.51% or 225 yuan/mt at 15,120 yuan/mt, with open interest down 5,526 lots to 49,615 lots.

Lead futures prices bottomed out, and the traders also raised their offers with climbing lead prices. The shipment of primary and secondary smelters was relatively active, but the downstream purchased on rigid demand that was meagre. Most large-manufacturers sourced with long-term orders, and retail sales was poor.

Zinc: The most-traded SHFE 2207 zinc closed down 1.58% or 420 yuan/mt at 26,130 yuan/mt, with open interest up 2,481 lots to 114,540 lots.

On the supply side, SHFE/LME price ratio stood between 6.4-6.7, and the import window for ore closed. Domestic traders and smelters were less interest in purchasing overseas ores, resulting in extended supply tightness in China. On the consumption side, traders slightly lowered their offers along with falling zinc prices. But the downstream demand is recovering slowly, and the marginal weakness of COVID impacts on the production side has not yet paid off. Zinc market will maintain weak fundamentals in the near term.

Tin: The most-traded SHFE 2207 tin closed down 1.45% or 3,760 yuan/mt at 256,320 yuan/mt, with open interest up 449 lots to 35,182 lots.

In the spot market, upstream sellers mostly quoted 257,750 yuan/mt, down 4,250 yuan/mt from yesterday, but the transactions did not improve according to market feedback. SHFE warrants dropped 12 mt to 2,844 mt, and LME tin inventory rose 40 mt to 2,975 mt as of June 6.

In addition, the import losses continued to expand, which stood at 23,555.86 yuan/mt, 23,903.24 yuan/mt and 25,378.52 yuan/mt respectively based on SHFE 2206, 2207 and 2208 tin contracts.

Nickel: The most-traded SHFE 2207 nickel closed down 0.31% or 680 yuan/mt at 219,500 yuan/mt, with open interest up 4,784 lots to 63,323 lots.

Nickel imports maintained profitability, and some pure nickel completed the customs clearance, but the overall supply was still tight. The downstream players were mostly wait-and-see, while the demand for nickel sulphate from the precursor sector is expected to pick up in June with a series of policies to encourage the development and consumption of new energy vehicles. The production of stainless steel mills are unlikely to recovery substantially with pessimistic output on demand recovery, high in-plant inventory and pressure from the profits. LME inventory was still at its historical low, and SHFE inventory was also low despite small increased, which will underpin nickel prices. Nonetheless, sluggish downstream demand will drag on the prices.

[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.]

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