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The Group of Seven (G7) summit opened in Hiroshima, Japan on May 19. The G7 leaders issued a joint statement, agreeing to expand sanctions on Russia and promising to provide further support to Ukraine.
Existing sanctions against Russia will be expanded to target "the export of industrial machinery, tools and other technology that Russia uses to rebuild its war machine," and will continue to restrict Russia's gains from metals and diamond trade, G7 leaders said in a joint statement, Reuters reported.
They also pointed out that sanctions evasion by third countries has weakened the effectiveness of the measures and G7 countries are talking with the countries involved. G7 leaders also pledged further economic and military support to Ukraine this year and next.
Ukrainian President Volodymyr Zelensky will go to Hiroshima to attend the G7 summit, Ukrainian National Security and Defense Council secretary Alexei Danilov said on May 19. According to NHK, relevant Japanese government sources revealed that Zelensky will visit Japan on May 20.
Japan is arranging the meeting schedule so that Zelensky can participate in the discussion on Ukraine issues with G7 leaders on May 21.
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1.LME Base Metals Rose across the Board, SHFE Nickel Plunged
2.Most LME Base Metals Closed Lower, SHFE Nickel Prices Plunge, Ferrous Metals Mostly Rose
A Bull Gold Market Has Just Begun
Shanghai nonferrous metals closed mixed in day trading. On the macro front, the US government may reach an agreement on the debt ceiling issue this Sunday. Some US Fed officials have recently made hawkish remarks, so the market expected that the interest rate might be raised in June. The US dollar index rebounded overnight, weighing on the base metals prices.
SHFE copper climbed 0.14%, aluminium dipped 0.19%, lead gained 0.82%, zinc lost 0.72%, tin grew 0.73%, and nickel rose 0.64%.
Copper: SHFE 2306 copper climbed 90 yuan/mt or 0.14% to 65,690 yuan/mt. The open interest lost 15,064 lots to 144,250 lots.
The intraday spot transactions weakened amid the high premiums. According to SMM data, the inventory in Shanghai dipped 7,600 mt to 69,700 mt, which may enable the spot holders to quote highs. The spread between the SHFE front-month and next-month contracts grew to 200 yuan/mt in the backwardation structure. The market shall pay attention to the arrivals of imported spots.
Aluminium: SHFE 2306 aluminium dipped 35 yuan/mt or 0.19% to 18,450 yuan/mt. The open interest decreased 11,729 lots to 141,857 lots.
The pace of cooling of US inflation is not enough for the Federal Reserve to suspend interest rate hikes, and the debt ceiling agreement has not yet been reached, thus there are many macro uncertainties. Fundamentals: The domestic operating aluminium capacity continued to increase in May. In terms of cost, the average price of SMM prebaked anodes plunged month-on-month in May, and the power cost of smelters with captive power plants also declined. Demand is lower than expected, and new orders at downstream enterprises are weak. Overseas demand for aluminium semis is not good. Consumption will hardly improve in May. However, with the rapid decline in global aluminium ingot inventories, the risk of overseas short squeeze has increased. Rising spot premiums in east China should support SHFE aluminium prices.
Lead: SHFE 2306 lead gained 125 yuan/mt or 0.82% to 15,380 yuan/mt. The open interest rose 842 lots to 44,545 lots.
Zinc: SHFE 2306 zinc lost 150 yuan/mt or 0.72% to 20,795 yuan/mt. The open interest declined 9,334 lots to 78,568 lots.
Spot premiums rose today amid low market supply and falling futures prices. The market only saw trades among traders, and the downstream companies only restocked a small amount of spots on dips.
Tin: SHFE 2306 tin grew 1,450 yuan/mt or 0.73% to 200,570 yuan/mt. The open interest increased 3,447 lots to 49,072 lots.
With the rebound in SHFE tin prices intraday, the downstream enterprises became less willing to purchase spots. But the overall trading volume improved compared with the previous trading day.
Nickel: SHFE 2306 nickel closed up 1,060 yuan/mt or 0.64% at 167,300 yuan/mt. The open interest fell 2,498 lots to 63,568 lots.
On May 19, premiums of Jinchuan nickel were 11,500-11,800 yuan/mt. The average premium stood at 11,650 yuan/mt, up 450 yuan/mt from the previous trading day. Premiums of NORNICKEL nickel stood at 6,800-7,000 yuan/mt. The average premium was 6,900 yuan/mt, an increase of 500 yuan/mt from the previous trading day. Pure nickel supply tightened today thanks to the improved transactions in the past few days, hence the spot premiums grew. Nickel briquette prices were 166,000-167,000 yuan/mt, down 2,250 yuan/mt from the previous trading day. The nickel briquette transactions were slack as it was still traded at premiums over nickel sulphate.
As of Friday , SMM copper inventory across major Chinese markets stood at 123,500 mt, down 17,600 mt from Monday and 28,500 mt from last Friday. Compared to Monday, copper inventories fell across China’s major markets. The total inventories increased 3,600 mt from 119,900 mt in the same period last year.
Inventories in Shanghai decreased16,800 mt from the same period last year. The inventories were 14,000 mt higher than the same period last year, those in Jiangsu were 3,900 mt higher, and those in Chongqing were 2,000 mt higher.
Compared with Monday, inventories in Shanghai fell 7,600 mt to 69,700 mt, inventories in Guangdong decreased 8,100 mt to 40,000 mt, inventories in Jiangsu dropped 600 mt to 8,000 mt, inventories in Tianjin dipped 500 mt to 1,000 mt. Thanks to the continuous decline in copper prices, the price difference between copper cathode and copper scrap shrank sharply. This turned most downstream buyers to purchase copper cathode, leading to declines in copper inventories across China’s major markets. It is worth noting that Guangdong’s inventory dropped the most this week. In addition to the improvement in consumption, the decrease in arrivals also drove down inventories. Smelters outside Guandong have reduced shipments to Guangdong due to improving local consumption.
SMM understood that the import window has reopened, thus the customs clearance of imported copper will grow next week. Supply will increase. On the demand side, copper prices are showing signs of rebounding, and demand is expected to drop compared with this week. In aggregate, SMM expects supply to grow and demand to weaken next week. And inventory would grow slightly.
LME copper prices closed at $8,158.5/mt last evening, down 1.8%. Trading volume was 15,000 lots and open interest stood at 256,000 lots. SHFE 2306 copper contract finished at 65,190 yuan/mt last evening, down 0.62%. Trading volume was 34,000 lots, and open interest stood at 153,000 lots.
On the macro front, the United States announced solid economic data, further reducing market bets on the Fed's easing policy. In addition, the US dollar index rebounded on expectations that the United States will reach a debt ceiling agreement to avoid a potential default.
In terms of fundamentals, as cargoes under warrants have not been offered for sale after delivery in the Shanghai market on Thursday, the supply of available goods in the market was extremely tight. Spot quotes rise. Consumption in south China improved even as copper prices rebounded. The market needs to pay attention to whether the inflow of imported copper can alleviate the tight spot supply. In terms of price, although the debt ceiling issue of the United States has eased, the market is still worried about the financial market. With weak fundamental support, copper prices are expected to continue to remain low.
LME copper closed at $8,308/mt in overnight trading. Trading volume was 21,000 lots and open interest stood at 256,000 lots. SHFE 2306 copper contract finished at 65,750 yuan/mt last evening, up 2.19%. Trading volume was 61,000 lots, and open interest stood at 164,000 lots.
On the macro front, the US dollar index rose on optimism over a deal to extend the debt ceiling and avoid a US default. Also boosting the dollar was a round of solid economic data suggesting the Fed's rate cuts may be delayed rather than brought forward.
In terms of fundamentals, the spot supply was tight as there had not been cargoes under warrants offered for sales after delivery. Downstream procurement has increased due to lower SHFE copper prices. Spot quotes thus rose. In addition, there will be additional inflows of imported copper due to import profits. Copper prices rebounded as shorts took profits. The guidance for copper prices from fundamentals are still weak.