Base Metals Rebound, with Nickel Volatility Most Significant (Nov. 23-27, 2015)

SHANGHAI, Nov. 27 (SMM) – Geopolitical risks increased due to tensions between Russia and Turkey. The US dollar breached 100, and crude oil prices rallied. Base metals prices rebounded across the board. Nickel, zinc and aluminum prices saw big volatility.

A large number of shorts retreated from aluminum and zinc due to output cut news and market expectations of stockpiling by the State Reserve Bureau (SRB). LME nickel price volatility was the most significant this week. LME nickel dropped to a new low since 2003 early in the week but rebounded over 12%. Total positions on SHFE nickel decreased over 90,000, with spot nickel price in China increasing 9.09% at one point. But as nickel futures prices rolled back early gains at the week’s end, spot nickel prices also fell. Cargo holders liquidated inventories proactively given ample supplies of imported goods.SMMI Ni surged 2.3% at the week’s end.

SHFE 1602 zinc surged 7% thanks to news that ten Chinese zinc smelters will cut output by 500,000 mt next year. LME zinc prices rose 5.3%. Zinc smelters sold proactively at higher prices, sending spot premiums down from RMB 500/mt to RMB 100/mt. SMMI Zn fluctuated as much as 6.72%, and was up 4.93% at the week’s end.

LME aluminum prices dipped to a six-year low of USD 1,432.5/mt, but rallied to USD 1,500/mt market helped by SHFE aluminum. SHFE 1602 aluminum tumbled to RMB 9,550/mt, then rose by three days in a row to RMB 10,500/mt, up 10%, and increasing by daily limits. Spot discounts expanded to RMB 200/mt at one point but narrowed at the week’s end, with trading quite. SMMI Al volatility reached 6.28%, and fell back to 5.55%.

SMMI Cu rose as much as 4.55%, but dropped to 1.34% at the end of the week. SMMI Sn climbed 3.09% but declined all the way, down 2.57% at the week’s end.

SMMI Pb only increased 1.38%. SMMI grew 2.35%.