Slight Divergence Between SHFE and LME Lead: LME Lead Breaks Above $1,940/mt While SHFE Lead Lags [SMM Lead Morning Update]

SMM, September 22:

Overnight, the LME lead 3M contract opened at $1,919.0/mt on September 21. During the Asian session, futures opened lower and consolidated, briefly dipping to $1,917.5/mt. In the European session, prices rebounded amid consolidation. Near the end of the overlapping European and US sessions, trading volume surged and prices shot up to a high of $1,942.0/mt. In late trading, prices pulled back slightly from highs and finally settled at $1,935.0/mt, up $14.0/mt or 0.73% from the previous trading day's closing price. The full-day trading range was $1,917.5–1,942.0/mt, with volume of 10,551 lots, an increase of 1,955 lots. Open interest stood at 188,208 lots, up 3,639 lots. The daily candlestick recorded a large bullish candlestick.

Overnight, the SHFE lead 2611 contract opened higher in the night session at 16,470 yuan/mt. It shot up to 16,475 yuan/mt at the open, refreshing the high of this rebound before pulling back quickly. From 23:00 to the early morning, it briefly dipped to 16,385 yuan/mt, then stabilized and rebounded, finally settling at 16,440 yuan/mt, up 25 yuan/mt or 0.15% from the previous trading day's closing price. Volume was 34,901 lots, and open interest was 73,416 lots. The daily candlestick recorded a small bullish candlestick with upper and lower shadows.

Overall, SHFE and LME futures were both strong in resonance. LME lead broke above the previous high on increased volume and outperformed SHFE lead. The SHFE lead 2611 contract pulled back slightly after shooting up and was relatively lagging. KDJ for both has entered overbought territory, and the risk of chasing gains in the short term is accumulating.