SMM Morning Comment For SHFE Base Metals October 23

SHANGHAI, October 23(SMM) –
Copper
SMM copper morning comment
SHANGHAI, Oct 23 (SMM) - LME copper prices opened at $7959/mt and closed at $7940/mt last Friday, a drop of 0.88%, with the low-end of $7930.5/mt and the high-end of $7985.5/mt. Trading volume was 17,000 lots, and open interest stood at 268,000 lots. The most active SHFE 2311 copper contract prices opened at 66190 yuan/mt and finished at 66310 yuan/mt last Friday evening, down 0.23%, with the low-end of 66230 yuan/mt and the high-end of 66470 yuan/mt. Trading volume was 16,000 lots, and open interest stood at 119,000 lots. On the macro front, Fed Bostic believes the Fed will not cut interest rates before the middle of next year. The end of 2024 may be the time for the Federal Reserve to cut interest rates. SMM data showed that as of Friday October 20, copper inventory across major Chinese markets stood at 95,300 mt, down 18,800 mt from last Monday and down 22,000 mt from two Fridays ago. Specifically, acceptable downstream demand in East China and some supplies being transferred to South China, resulted in a decrease in inventory in East China. Demand in South China also showed strong performance, and inventories fell. In terms of consumption, companies are still scheduling production orders, and demand is expected to remain strong. In terms of price, copper prices are expected to remain relatively low in the near future.
Aluminum
At last Friday’s night session, the most-traded SHFE 2311 aluminum contract opened at 18965 yuan/mt, with its low and high at 18900 yuan/mt and 19005 yuan/mt before closing at 18980 yuan/mt, up 11 yuan/mt or 0.06%. LME aluminum opened at $2188/mt last Friday, with its low and high at $2169/mt and $2190.5/mt respectively before closing at $2180/mt, a drop of $10/mt or 0.46%.
US Federal Reserve's dovish policy and China's Q3 economic growth have modestly improved market sentiment. China's aluminium supply remains steady, but power situations in areas like Yunnan need monitoring in Q4. Aluminium inventory showed signs of falling. And a narrowing profit margin on imports could potentially reduce import volume. Year-end surge in Q4 demand could tighten the aluminium market balance. This week, SHFE's most-traded aluminium contract may range between 18,700-19,600 yuan/mt, and LME aluminium could fluctuate between $2,140-2,270/mt.
Lead
SMM Lead Morning Comment
SHANGHAI, Oct 23 (SMM) -
LME lead prices opened at $2092.5/mt and closed at $2090.5/mt last Friday evening, down $1/mt or 0.05%, with the low-end of $2066.5/mt and the high-end of $2102/mt. As of October 20, LME lead inventories have once again increased by 2,000 mt, continuing the accumulation trend since mid-October.
The most-traded SHFE 2311 lead contract opened at 16430 yuan/mt and grew 90 yuan.mt or 0.55% to 16590 yuan/mt briefly hitting the lowest point at 16385 yuan/mt and the highest point at 16595 yuan/mt.
Zinc
SMM Zinc Morning Comment
Last Friday, LME zinc opened at $2422.5/mt and closed up $8.5/mt or 0.35% at $2438.5/mt. The trading volume was 6269 lots, and open interest fell 1301 lots to 207,000 lots. LME inventories continued to fall to 78,125 mt, and most of the destockings were from Singapore warehouses. Combined with the fact that China’s zinc imports in September exceeded expectations by 59,000 mt, it is more likely that overseas inventories will be transferred domestically. Overseas consumption has weakened.
Last Friday evening, the most active SHFE 2311 zinc contract prices opened at 20975 yuan/mt and closed at 21075 yuan/mt, up 95 yuan/mt or 0.45 %. Trading volume stood at 42,000 lots, and open interest decreased by 1583 lots to 70,000 lots. Zinc concentrate in northern China is about to enter the seasonal off-season. At the same time, the output of imported ore is less than expected. The tightness of the ore end will continue, and TCs may continue to decrease. However, oversupply in the smelting end is unlikely to reverse. Smelters maintained normal production thanks to imported ore. Fundamental support is limited.

Tin
SHFE 2311 tin contract price dropped slightly to a low of 214,440 yuan/mt at the opening of last Friday’s night session and then gradually rose back to a high of 216,040 yuan/mt.
During the early trading last Friday, spot premiums and discounts in domestic spot market for various domestic tin ingot brands changed little. Small brand tin ingots were offered at premiums of 0-300 yuan/mt, versus premiums of 400-700 yuan/mt for delivery brands, premiums of 900-1,200 yuan/mt for Yunxi brand, and discounts of 300-600 yuan/mt for imported brand tin ingots. Transaction situation last Friday was still sluggish and improved only a little compared to last Thursday.
Nickel
On the macro aspect, U.S. retail sales rose 0.7% in September, beating expectations of 0.30% and surpassing the previous value of 0.60%. US economic data once again exceeded expectations and reflects that consumer spending intent in the current US market remains strong. The probability of the Fed raising interest rates in December has surged to 43%, while the US dollar index saw a spike followed by a retreat. Additionally, due to escalating geopolitical conflicts, investors sought safety in the US dollar and gold, causing both their prices to rise, while commodities faced pressure. Looking at the fundamentals, on the supply side, new electrowinning nickel production capacity came online this month, and the current pure nickel production is still in the ramp-up phase. On the import side, due to the ongoing substitution of imported nickel plates in the domestic market, the continuous reduction in overseas nickel plate imports persists. On the demand side, there was a decline in overall demand last week, mainly due to reduced downstream orders and pre-holiday inventory build-up. In the alloy sector, civilian alloy orders remain weak, relying on military alloy orders to support demand. In the stainless steel sector, due to reduced production in the 300 series, the 316 series saw the biggest decrease in output, and this is expected to continue until November, leading to a sustained reduction in demand for pure nickel. In summary, considering the current weak fundamentals and macro factors, it is expected that nickel prices will remain weak but stable this week.