SMM Morning Comment For SHFE Base Metals (Oct 30)

SHANGHAI, Oct 30 (SMM) –

Copper

Copper Prices Stabilize as Market Awaits More Economic Data [SMM Copper Morning Comment]

LME copper opened at $9,622.5/mt overnight, initially reaching a high of $9,648/mt before declining throughout the session, hitting a low of $9,513/mt near the close, and finally rebounding slightly to close at $9,550/mt, down 0.06%. Trading volume reached 22,000 lots, and open interest was 276,000 lots. The most-traded SHFE copper 2412 contract opened at 76,660 yuan/mt overnight, initially reaching a high of 77,030 yuan/mt before declining throughout the session, hitting a low of 76,470 yuan/mt during the session, and finally rebounding slightly to close at 76,570 yuan/mt, up 0.07%. Trading volume reached 45,000 lots, and open interest was 152,000 lots. Macro side, the number of US JOLTs job openings in September fell to 7.443 million, the lowest level since early 2021, leading traders to increase their bets on a US Fed interest rate cut, stabilizing copper prices. However, the US core personal consumption expenditures price index for September, to be released on Thursday, will be the Fed's preferred inflation gauge. Fundamentally, as copper prices have recently fluctuated rangebound, end-use orders have seen a slight recovery, and some downstream consumption demand has also increased. Additionally, the SHFE copper contango structure has gradually narrowed, market pessimism has eased, and the supply of domestic copper cathode remains tight. It is expected that premiums will slightly recover today. In terms of prices, the US dollar index has risen 3.6% so far in October, marking its best monthly performance since April, putting pressure on copper prices and making it difficult for them to rise. The market is expected to maintain a fluctuating trend today as it awaits more economic data.

Aluminum

Domestic Policies Continue to Strengthen, Spot Market Supply Abundant [SMM Aluminum Morning Meeting Summary Oct 30]

Overnight, the most-traded SHFE aluminum 2412 contract opened at 20,870 yuan/mt, reaching a high of 20,885 yuan/mt and a low of 20,780 yuan/mt, and closed at 20,795 yuan/mt, up 15 yuan/mt from the previous close, an increase of 0.07%. Trading volume was 46,600 lots, open interest was 205,000 lots, with a daily reduction of 1,304 lots. Yesterday, LME aluminum opened at $2,647.5/mt, reached a high of $2,682.5/mt, a low of $2,632/mt, and closed at $2,660/mt, up $8.5/mt, an increase of 0.32%.

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

Lead

Lead Prices Fluctuated Downward, Testing Cost Support, Local Secondary Refined Lead Quotes Were Higher than Primary Lead [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,029/mt, fluctuated downward after the opening, and hit a low of $1,996/mt during the European session before rebounding to the daily moving average, finally closing at $2,008.5/mt, down $18.5/mt, a decrease of 0.91%.

Overnight, the most-traded SHFE lead 2412 contract opened at 16,560 yuan/mt, initially rose to a high of 16,625 yuan/mt before weakening to a low of 16,535 yuan/mt, and then consolidated sideways, finally closing at 16,555 yuan/mt, down 130 yuan/mt, a decrease of 0.78%.

Macro side, the market currently believes there is a 95% chance that the US Fed will cut interest rates by 25 basis points next week. The US dollar index continues to fluctuate, and domestic fiscal stimulus measures continue to boost market sentiment.

Fundamentals side, the refined lead market remains tightly balanced in supply and demand. Primary lead and secondary refined lead smelters stand firm on quotes and are reluctant to sell. In some regions, secondary refined lead quotes are higher than primary lead. Downstream, long-term contract deliveries are the main focus, with general wait-and-see market sentiment and poor dip buying intentions. Continuous declines in LME lead have dragged down domestic lead prices, testing the cost support of secondary refined lead again. Attention should be paid to the follow-up of battery scrap prices and the recovery situation after the end of production cuts due to environmental protection. In the short term, lead prices are likely to continue fluctuating downward.

Zinc

The market increases its bets on US Fed interest rate cuts; zinc prices are expected to hover at highs [SMM Zinc Morning Comment Oct 30]

Overnight, the number of job vacancies in the US fell to its lowest level since early 2021; Israeli officials said a new round of Gaza ceasefire talks would be held this week; Netanyahu is reportedly holding a meeting to seek a diplomatic solution to the Lebanon issue; Iran plans to increase its military budget by 200%; Hezbollah in Lebanon appointed Naim Qassem as its new leader on the 29th; China decided to include Finland in its unilateral visa-free policy; the Ministry of Foreign Affairs expressed strong dissatisfaction and firm opposition to the US's investment restriction rules on China; the interest rates on certificates of deposit at the four major state-owned banks in China have all fallen below 2%; A-share buybacks hit a record high.

Overnight, LME zinc opened at $3,140.5/mt, initially fluctuating around the daily average, then fluctuating downward to hover below the daily average at $3,120/mt. During European trading hours, shorts reduced positions, and LME zinc quickly rose above the daily average to $3,182/mt, then dropped back slightly to fluctuate around $3,160/mt. Subsequently, longs reduced positions, and LME zinc fluctuated downward to a low of $3,088/mt below the daily average. At the end of the session, LME zinc rose slightly again, closing down at $3,127/mt, down $24.5/mt, a decrease of 0.78%. Trading volume increased to 88,695 lots, and open interest decreased by 339 lots to 255,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the upper Bollinger Bands forming resistance and the 40-day moving average providing support below. LME social inventory decreased by 3,750 mt to 243,325 mt, a reduction of 1.52%, recording a decrease in LME social inventory. Currently, the number of job vacancies in the US for September fell to 7.443 million, the lowest level since early 2021, increasing market bets on US Fed interest rate cuts. LME zinc is expected to hover at highs.

Overnight, the most-traded SHFE zinc 2412 contract opened at 25,080 yuan/mt. Initially, longs increased positions, and SHFE zinc quickly rose to a high of 25,240 yuan/mt. Subsequently, longs took profits and exited, causing SHFE zinc to fluctuate downward to a low of 24,995 yuan/mt below the daily average. Then, shorts reduced positions, and SHFE zinc fluctuated upward, closing up at 25,070 yuan/mt, up 60 yuan/mt, an increase of 0.24%. Trading volume decreased to 80,590 lots, and open interest increased by 787 lots to 113,000 lots. Overnight, SHFE zinc recorded a small doji, with the upper Bollinger Bands forming resistance and the lower Bollinger Bands providing support. Currently, on the fundamentals side, both domestic and imported ore supplies are tight, and demand is also weak. SHFE zinc is expected to hover at highs, with more macro data to be watched in the future.

Tin

SHFE tin prices jumped initially and then pulled back in the night session, with downstream buyers mostly restocking as needed [SMM Tin Morning News Oct 30]

SMM, October 30, 2024: Yesterday, the most-traded SHFE tin contract closed at 254,460 yuan/mt, down 1,030 yuan/mt, a decrease of 0.40%. The highest price was 257,270 yuan/mt, and the lowest was 253,970 yuan/mt. During yesterday's morning session, trading companies' quotations for various domestic tin ingot brands showed little change compared to recent days. Small brand tin ingots were quoted at premiums of +0~+200 yuan/mt against the SHFE 2411 contract, delivery brands at +200~+600 yuan/mt, Yunnan tin brand at +600~+800 yuan/mt, and imported tin brands at -700 yuan/mt against the SHFE 2411 contract. Tin prices continued to decline yesterday, and in the night session, prices jumped initially and then pulled back, showing a lack of overall upward momentum. Downstream companies made small purchases as prices fell, with most opting to restock as needed. Most trading companies saw scattered transactions, with a few trading companies completing transactions of around one truckload. Overall, the spot market transactions were mediocre yesterday.

Nickel

On October 29, Jinchuan nickel was quoted at a premium of 1,600-1,800 yuan/mt, with an average of 1,700 yuan/mt, up 150 yuan/mt from the previous trading day. Norilsk nickel was quoted at a discount of 200-0 yuan/mt, with an average of 100 yuan/mt, up 50 yuan/mt from the previous trading day. On the morning of October 29, the futures market fluctuated, and spot premiums slightly increased compared to the previous working day, mainly due to the overall decline in nickel prices. Nickel briquette prices were 123,300-123,600 yuan/mt (in short supply), down 2,300 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 982 yuan/mt (nickel sulphate prices were 982 yuan/mt higher than nickel briquette prices).