SMM Evening Comments (Oct 28): Shanghai nonferrous metals closed mostly higher, nickel fell 1.99%

SHANGHAI, Oct 28 (SMM) – SHFE nonferrous metals rose for the most part on Wednesday October 28 as coronavirus infections continue to rise stateside, while oil prices dropped.

On the economic data front, Australia's consumer price index rose 1.6% in the September quarter as compared to the previous quarter, according to data released Wednesday by the Australian Bureau of Statistics (ABS). The rise in the September quarter followed a “record fall” of 1.9% in the June 2020 quarter, according to the ABS.

Nickel, the best performer, surged 5.31%, lead advanced 1.4%, zinc climbed 2.06%, tin went up 0.15% and copper gained 0.6%, while aluminium edged down 1.15%.

China's exports of stainless steel fell 6,000 mt or 2.13% month on month and decreased 21.8% year on year to 263,500 mt, showed China customs data compiled by SMM. China imported 177,100 mt of stainless steel last month, up 31.8% from August and up 74.4% from September 2019.

The ferrous complex also traded higher. Iron ore increased 2.41%, rebar rose 1.44%, and hot-rolled coil climbed 1.31%.

Copper: The most-traded SHFE 2012 copper contract finished the day 0.6% higher at 51,840 yuan/mt. The index of consumer confidence dropped in October, which was mainly due to the growing concern about the economic prospects caused by the pandemic, and the increase of durable goods orders in the US in September was higher than expectations. Copper futures closed up in afternoon trading mainly due to the general increase of nonferrous industrial products, but the bullish sentiment was slightly weak compared with other metals. However, there are many macro concerns in the near future. With the coming of the 14th Five-Year Plan and the US general election, bulls will gradually enter the market, which will prompt copper prices to rise slightly. News of the Fifth Plenary Session and whether the contract could maintain its upward trend will continue to come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2011 aluminium contract closed down 1.15% at 14,585 yuan/mt. Open interest fell 15,680 lots to 84,940 lots.

Zinc: The most-active SHFE 2012 zinc contract rose to an intraday high of 20,135 yuan/mt and finished the day 2.06% higher at 20,065 yuan/mt. Open interest rose 29,522 lots to 111,438 lots. SHFE zinc has increased its open interests by more than 30,000 mt in total, becoming the second-largest variety in the nonferrous sector, and its performance is extremely strong. The main reason is that the market rumors that smelters have planned to reduce production due to mine problems, and the contradiction between mine supply has intensified. However, as far as SMM knows, this contradiction has not intensified so rapidly at present, and there is a risk of falling tonight.

Nickel: The most-traded SHFE 2012 nickel contract ended the day 5.31% higher at 125,210 yuan/mt today. Open interest rose 35,269 lots to 139,175 lots. Nickel ore exports will decrease due to double typhoons landing in the Philippines.

Lead: The most-traded SHFE 2012 lead contract fell to an intraday low of 14,275 yuan/mt after opening as investors added their short positions and rose to an intraday high of 14,495 yuan/mt before repairing some gains to end the day 1.4% higher at 14,435 yuan/mt. Open interest rose 1,051 lots to 31,302 lots. High supply of lead ingots and weakening consumption are unlikely to support lead prices. The adverse effects caused by the rebound of the US dollar index and the disturbance of LME lead should be monitored. The contract will test support from 14,400 yuan/mt tonight.

Tin: The most-liquid SHFE 2101 tin contract climbed to a session high of 145,110 yuan/mt and finished the day 0.15% higher at 144,230 yuan/mt today. Open interest rose 2,503 lots to 29,020 lots. The contract is expected to keep fluctuating in the near term. Pressure below is expected to around 141,000 yuan/mt. Pressure above is expected to around 146,000 yuan/mt.