SMM Morning Comment For SHFE Base Metals (Oct 31)

SHANGHAI, Oct 31 (SMM) –

Copper

Overnight Copper Prices Dropped Slightly as Market Awaits Key Data Release [SMM Copper Morning Comment]

Overnight, LME copper opened at $9,546/mt, initially declined to $9,488/mt, then rose all the way, fluctuated rangebound during the session, and peaked at $9,566/mt. It dropped back slightly at the end of the session, finally closing at $9,559/mt, up 0.09%. Trading volume reached 16,000 lots, and open interest reached 275,000 lots. Overnight, the most-traded SHFE copper 2412 contract opened at 76,270 yuan/mt, initially dipped to 76,250 yuan/mt, then fluctuated upwards during the session, and peaked at 76,630 yuan/mt. It dropped back slightly at the end of the session, finally closing at 76,440 yuan/mt, down 0.3%. Trading volume reached 35,000 lots, and open interest reached 155,000 lots. Macro side, last night, the US released the "small non-farm" data, with October ADP employment numbers recording 233,000, the largest increase since July 2023. Some analysts believe that a stronger-than-expected labour market may make US Fed officials less aggressive in cutting interest rates. Fundamentally, supply side, the recent impact of imported copper is gradually fading, but the issue of reduced domestic supply is emerging, leading to tight spot copper cathode supply. Demand side, copper prices fluctuate rangebound, with downstream restocking mainly driven by rigid demand. Overall market activity remains low, and consumption demand is expected to show no significant improvement by month-end. Copper prices are expected to maintain a fluctuating trend before the release of a series of key data. Attention should be paid to the subsequent copper price trends.

Aluminum

US macro data lower-than-expected; SHFE aluminum fluctuated and fell overnight [SMM Aluminum Morning Meeting Summary Oct 31]

Overnight, the most-traded SHFE aluminum 2412 contract opened at 20,810 yuan/mt, with a high of 20,835 yuan/mt and a low of 20,720 yuan/mt, closing at 20,730 yuan/mt, down 85 yuan/mt from the previous close, a decrease of 0.41%. Trading volume was 42,500 lots, open interest was 204,000 lots, with a daily reduction of 2,804 lots. Yesterday, LME aluminum opened at $2,660.5/mt, reached a high of $2,677.5/mt, a low of $2,612.5/mt, and closed at $2,615/mt, down $45/mt, a decrease of 1.69%.

Summary: On the 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. On the fundamentals side, the bauxite supply crisis has led to a significant increase in alumina prices, and the cost of the aluminum industry has risen noticeably. Overall, current aluminum ingot spot inventory destocking continues, while the cost side supports aluminum prices to fluctuate at a relatively high level.

Lead

Overnight Lead Market: SHFE Outperformed LME, Domestic Lead Prices Supported by Costs [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,029/mt and fluctuated downward after the opening. During the European session, it dipped to $1,996/mt before rebounding to the daily moving average, finally closing at $2,008.5/mt, down $18.5/mt or 0.91%.

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

Macro side, US economic data was mixed, and the outlook for US Fed's easing policy remains unclear. The US dollar index weakened slightly. On October 30, the NDRC and five other departments issued the "Guiding Opinions on Vigorously Implementing Renewable Energy Substitution Actions," proposing 17 specific measures from various aspects.

Fundamentals side, despite disruptions in secondary refined lead production, the total supply of refined lead and downstream operating rates both increased in October. The supply of lead concentrate and battery scrap remained relatively tight. After consecutive declines in lead prices, mid-week battery scrap prices were adjusted downward under pressure, but the decrease was limited. Inventories at primary and secondary refined lead smelters remained generally low, maintaining premiums and reluctance to sell. Downstream buyers mainly fulfilled long-term contracts and generally adopted a wait-and-see approach. Domestic lead prices were clearly supported by costs, and the market is likely to continue fluctuating rangebound.

Zinc

Supply and Demand Remain Weak, Zinc Prices Maintain Fluctuating Trend [SMM Zinc Morning Comment Oct 31]

Overnight, the US Q3 GDP was below expectations, while October's ADP employment data exceeded expectations significantly. Various sources indicated that a ceasefire between Israel and Lebanon is imminent. The Kremlin denied reports of "preliminary talks between Ukraine and Russia on stopping attacks on each other's energy facilities." Sources suggested that OPEC+ might continue to delay its production increase plans. Germany's Q3 GDP was better than expected, leading traders to reduce their expectations of a 50 basis point interest rate cut by the European Central Bank in December. The Ministry of Commerce stated that China firmly opposes the final US rules on investment restrictions against China. Six departments urged the acceleration of large wind and solar power base construction, focusing on desert, Gobi, and barren areas. Some central enterprises have already modified energy storage bidding rules, reducing the weight of price, involving the wind and solar power storage industry. BYD surpassed Tesla in quarterly revenue for the first time.

Overnight, LME zinc opened at $3,123/mt. Initially, LME zinc fluctuated around the daily moving average, then fluctuated downward below the daily moving average, with the focus hovering around $3,107/mt. Subsequently, LME zinc slightly moved upward, fluctuating around the daily moving average, reaching a high of $3,148/mt. During the night session, LME zinc's focus moved downward to a low of $3,074/mt, and by the end of the session, it slightly moved upward again, fluctuating around $3,085/mt, closing down at $3,087/mt, a decrease of $40/mt or 1.28%. Trading volume decreased to 72,416 lots, and open interest decreased by 1,851 lots to 253,000 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 inventory decreased by 2,100 mt to 241,225 mt, a reduction of 0.86%. Currently, the US Q3 GDP is below expectations, and although October's "small non-farm payrolls" data performed well, the market is significantly affected by the Q3 GDP data results. LME zinc is expected to maintain a fluctuating trend.

Overnight, the most-traded SHFE zinc 2412 contract opened at 24,960 yuan/mt. Initially, with increased long positions, SHFE zinc fluctuated widely around the daily moving average, reaching a low of 24,945 yuan/mt. Subsequently, with increased short positions, SHFE zinc fluctuated upward, reaching a high of 25,085 yuan/mt. Then, with reduced long positions, SHFE zinc fluctuated downward, and by the end of the session, it fluctuated narrowly around 24,980 yuan/mt, closing down at 24,985 yuan/mt, a decrease of 45 yuan/mt or 0.18%. Trading volume decreased to 73,547 lots, and open interest increased by 1,842 lots to 115,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the 10-day moving average forming resistance above and the middle Bollinger Bands providing support below. Currently, although supply-side inventory has slightly increased, the upcoming seasonal production reduction in northern mines and winter stockpiling demand keep the supply tight. Downstream consumption has not shown significant highlights, and zinc prices are expected to hover at highs.

Tin

SHFE tin prices opened lower and trended downwards in the night session; some downstream enterprises began to restock as needed [SMM Tin Morning News Oct 31]

SMM, October 31, 2024: Yesterday, the most-traded SHFE tin contract closed at 252,860 yuan/mt, down 2,570 yuan/mt, a decrease of 1.01%. The highest price was 254,920 yuan/mt, and the lowest was 252,130 yuan/mt. During the morning session yesterday, trading companies' quotations for various domestic tin ingot brands' premiums and discounts 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 premiums of +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 fluctuated rangebound, and night session tin prices opened lower and trended downwards, lacking upward momentum. Downstream enterprises restocked as prices fell, with some choosing to restock as needed. Some trading companies transacted 10-20 mt, while a few traded 1-2 trucks. Overall, the activity in the spot market increased yesterday.

Nickel

On October 30, Jinchuan nickel was quoted at a premium of 1,700-1,900 yuan/mt, with an average of 1,800 yuan/mt, up 100 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, remaining unchanged from the previous trading day. On the morning of October 30, 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 123,500-123,700 yuan/mt (in short supply), up 150 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 936 yuan/mt (nickel sulphate prices were 936 yuan/mt higher than nickel briquette prices).