SMM Evening Comments (Oct 27): Shanghai nonferrous metals declined for the most part, lead advanced 0.91%

SHANGHAI, Oct 27 (SMM) – SHFE nonferrous metals broadly fell on Tuesday October 27 as Investor sentiment may have been impacted by sharp overnight declines on Wall Street amid a jump in coronavirus infections. Optimism is also fading over the White House striking a stimulus deal with Democrats before the elections.

Shanghai nonferrous metals, except for lead and nickel, traded lower on Tuesday October 27. Copper dropped 0.54% to lead the losses, aluminium shed 0.24%, tin declined 0.17%, and zinc fell 0.31%, while nickel advanced 0.38% and lead climbed 0.91%.

A total of 83 vessels carrying 13.07 million mt of iron ore arrived at major Chinese ports during October 18-24, SMM estimates. This was down 2.08 million mt from the previous week, and down 930,000 mt from the same period last year. The amount of arrivals in Shandong extended declines on the week, while those in Tangshan extended slight gains.

The ferrous complex rose across the board. Iron ore increased 0.2%, rebar rose 0.08%, and hot-rolled coil climbed 0.58%.

Copper: The most-traded SHFE 2012 copper contract finished the day 0.54% lower at 51,650 yuan/mt. The US election and the confusion of stimulus bill caused short-term disturbance, and the negotiations between the US Democratic Party and the White House failed again, with little hope of passing the stimulus bill before the election. On Monday, the WTO officially authorized the European Union to impose tariffs on US exports worth about US$ 4 billion a year in retaliation for US illegal subsidies to Boeing Company, which further disturbed the macro markets in Europe and America. On the other hand, the US dollar index continued to fluctuate, staying near 93, and the pressure on copper futures was obvious. Domestically, Profits at China’s industrial firms totalled 4,366.50 billion yuan from January to September, down 2.4% year on year, and the decline was 2.0 percentage points narrower than that in January-August, giving long positions pressure to a certain extent. News of the Fifth Plenary Session will continue to come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2011 aluminium contract closed up 0.24% at 14,715 yuan/mt. Open interest fell 11,120 lots to 100,620 lots.

Zinc: The most-active SHFE 2012 zinc contract finished the day 0.31% lower at 19,610 yuan/mt. Open interest rose 2,821 lots to 81,916 lots. The contract is expected to keep fluctuating rangebound and move above 40-day moving average.

Nickel: The most-traded SHFE 2012 nickel contract ended the day 0.38% higher at 119,390 yuan/mt today. Open interest fell 969 lots to 103,906 lots. China imported 6.21 million mt of nickel ore and concentrate last month, up 65.8% from August but down 30.4% from August 2019, according to data from China customs compiled and calculated by SMM.

Lead: The most-traded SHFE 2012 lead contract rose to an intraday high of 14,405 yuan/mt and ended the day 0.91% lower at 14,385 yuan/mt. Open interest fell 2,086 lots to 30,251 lots. Upstream and downstream trade in fundamentals has become more active compared with the previous period, and the secondary lead discount shrank with the overall oversupply. The contract is unlikely to go up. The contract will test support from five- and 10-day moving average of 14,350 yuan/mt tonight.

Tin: The most-liquid SHFE 2101 tin contract fell to a session low of 142,250 yuan/mt and ended the day 0.17% lower at 144,110 yuan/mt today. Open interest rose 4,027 lots to 26,517 lots. The contract is expected to keep fluctuating in the near term. Pressure below is expected to around 140,000 yuan/mt. Pressure above is expected to around 146,000 yuan/mt.