SMM Morning Comment For SHFE Base Metals (Oct 29)

SHANGHAI, Oct 29 (SMM) –

Copper

International Oil Prices Plunged, Copper Prices Dragged Down [SMM Copper Morning Comment]

LME copper opened at $9,541.5/mt overnight, initially fluctuated lower to $9,530/mt, then rose to $9,586/mt during the session, and finally dropped back slightly to close at $9,556/mt, down 0.08%. Trading volume reached 14,000 lots, and open interest was 275,000 lots. The most-traded SHFE copper 2412 contract opened at 76,620 yuan/mt overnight, initially dipped to 76,420 yuan/mt, then fluctuated rangebound to rise to 76,780 yuan/mt during the session, and finally dropped back slightly to close at 76,620 yuan/mt, down 0.03%. Trading volume reached 27,000 lots, and open interest was 152,000 lots. Macro side, Israel's retaliatory strike on Iranian forces bypassed oil and nuclear facilities, avoiding energy supply disruptions, leading to a crude oil plunge of over 6%. Additionally, no positive news for base metals emerged from the BRICS summit, dragging down copper prices. Fundamentally, supply side, domestic copper cathode arrivals were limited, causing a short-term tightening trend in major consuming provinces. Demand side, copper prices maintained a fluctuating trend within a range, with downstream just-in-time procurement and spot premiums similar to last week. However, domestic copper cathode social inventories fell again, mainly due to fewer domestic arrivals. As of Monday, October 28, SMM copper inventories in major regions nationwide decreased by 9,500 mt from last Thursday to 210,000 mt, but total inventories were 150,000 mt higher compared to the same period last year. Price side, before more economic data is released, copper prices are expected to maintain a fluctuating trend today.

Aluminum

Spot Inventory Continues to Decline, Macro Policies Boost Economy, Aluminum Prices Fluctuate at Highs [SMM Aluminum Morning Meeting Summary Oct 29]

Overnight, the most-traded SHFE aluminum 2412 contract opened at 20,830 yuan/mt, reaching a high of 20,870 yuan/mt and a low of 20,750 yuan/mt, and closed at 20,790 yuan/mt, down 155 yuan/mt from the previous close, a decrease of 0.74%. Trading volume was 47,800 lots, open interest was 211,000 lots, with a daily increase of 900 lots. Yesterday, LME aluminum opened at $2,663.5/mt, reached a high of $2,681.5/mt, a low of $2,633/mt, and closed at $2,651.5/mt, down $18.5/mt, a decrease of 0.69%.

Summary: Macro front, domestic policies continue to boost the economy, global market liquidity is ample, but the possibility of a ceasefire in the Middle East brings new variables to macro sentiment. Fundamentals side, a bauxite supply crisis has led to alumina prices rising to highs, and the cost of the aluminum industry has increased significantly. Overall, current aluminum ingot spot inventory continues to decline, while the cost side supports aluminum prices to fluctuate at a relatively high level.

Lead

Lead Prices Continued to Fluctuate; Secondary Refined Lead Profits Declined but Quotes Remained Firm [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,044.5/mt. During the Asian session, it briefly touched a high of $2,046/mt before weakening. In the European session, it dipped to $2,020/mt before slightly rebounding, finally closing at $2,027/mt, down $14.5/mt, a decrease of 0.71%.

Overnight, the most-traded SHFE lead 2412 contract opened at 16,745 yuan/mt. Initially dragged down by LME lead, it fluctuated downward before stabilizing near the daily moving average. Before the close, it fell again to a low of 16,675 yuan/mt, ending at 16,685 yuan/mt, down 10 yuan/mt, a decrease of 0.42%.

On the macro side, the US dollar index saw a slight correction, with investors focusing on the US October employment report this week. On the domestic fundamentals side, the spot market supply and demand remained tightly balanced, with downstream operating rates rising. According to SMM survey, secondary lead producers in Anhui, Jiangsu, Hebei, and Henan have reduced production due to environmental protection impacts, leading to a decrease in spot market circulating supply. The price spread between secondary lead and primary lead narrowed, with downstream companies showing a preference for primary lead. Social inventory slightly declined. As the end of October approaches, environmental protection inspections and smog-related production restrictions in relevant regions are expected to end, and attention should be paid to the resumption of smelters.

Zinc

Driven by the overseas market, SHFE zinc rises; zinc prices are expected to fluctuate at high levels in the short term [SMM Zinc Morning Comment Oct 29]

Iran: Will not give up the right to respond to Israel's "aggression"; Israel proposes not to expand ground operations in Lebanon in exchange for the US to impose blockade measures on Hezbollah; multiple ballot boxes in the US were set on fire again; the US Treasury Department lowers Q4 financing expectations to $546 billion; in China, long-term deposit rates of small and medium-sized banks have fallen below 2% across the board.

Overnight, LME zinc opened at $3,080.5/mt, initially fluctuated downward below the daily moving average to a low of $3,042.5/mt, then fluctuated upward above the daily moving average, fluctuating rangebound around $3,080/mt. However, as bulls reduced positions, LME zinc quickly fell below the daily moving average, then rose all the way to a high of $3,158/mt at the end of the session, finally closing up at $3,151.5/mt, up $52/mt, an increase of 1.68%. Trading volume decreased to 78,666 lots, and open interest decreased by 2,840 lots to 255,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the upper Bollinger Bands forming resistance and the 40-day moving average providing support below. LME inventory increased by 4,650 mt to 247,075 mt, an increase of 1.92%. LME inventory increased. Currently, the US Treasury Department lowers Q4 financing expectations, reducing borrowing demand in Q4, coupled with tight supply, zinc prices are expected to maintain a fluctuating trend.

Overnight, the most-traded SHFE zinc 2412 contract opened at 24,970 yuan/mt, immediately fell to a low of 24,955 yuan/mt after the opening, then bulls increased positions, pushing SHFE zinc up to a high of 25,185 yuan/mt. After encountering resistance, it immediately fell below the daily moving average, then fluctuated upward above the daily moving average, fluctuating rangebound around 25,125 yuan/mt. However, as bears increased positions, SHFE zinc slightly fell, fluctuating around 25,110 yuan/mt. At the end of the session, as bears reduced positions, SHFE zinc rose, finally closing up at 25,180 yuan/mt, up 210 yuan/mt, an increase of 0.84%. Trading volume decreased to 82,715 lots, and open interest increased by 2,389 lots to 110,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the upper Bollinger Bands forming resistance and the middle Bollinger Bands providing support below. Currently, SHFE zinc rises driven by the overseas market, while domestic supply and demand remain weak, SHFE zinc is expected to maintain a fluctuating trend.

Tin

SHFE tin prices dropped back slightly during the night session, with downstream buyers mostly restocking as needed [SMM Tin Morning News Oct 29]

SMM, October 29: Yesterday, the most-traded SHFE tin contract closed at 256,210 yuan/mt, down 720 yuan/mt, a decrease of 0.28%. The highest price was 257,870 yuan/mt, and the lowest was 256,130 yuan/mt. During yesterday's morning session, the premiums and discounts quoted by trading companies for various domestic tin ingot brands did not change much compared to recent days. Small brand tin ingots were quoted at premiums of +0~+200 yuan/mt against the SHFE 2411 contract, delivery brand prices were quoted at +200~+600 yuan/mt against the SHFE 2411 contract, Yunnan tin brand quotations against the SHFE 2411 contract were +600~+800 yuan/mt, and imported tin brand spot cargo was quoted at -700 yuan/mt against the SHFE 2411 contract. Yesterday, tin prices hovered at high levels, and downstream buyers showed low enthusiasm for purchasing, with most choosing to observe or restock as needed in small quantities. Most trading companies saw scattered transactions, with a few trading companies completing transactions of around one truckload. Overall, the spot market remained sluggish yesterday.

Nickel

On October 28, Jinchuan nickel was quoted at a premium of 1,500-1,600 yuan/mt, with an average of 1,550 yuan/mt, remaining unchanged from the previous trading day. Norilsk nickel was quoted at a discount of 300-0 yuan/mt, with an average of 150 yuan/mt, up 50 yuan/mt compared to the previous trading day. On the morning of October 28, the futures market fluctuated, and there was no significant change in spot premiums compared to the previous working day. Nickel briquette prices were 125,600-125,900 yuan/mt (out of stock), down 250 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 834 yuan/mt (nickel sulphate prices were 834 yuan/mt lower than nickel briquette prices).