SMM Morning Comment For SHFE Base Metals November 17

SHANGHAI, November 17 (SMM) –
Copper
LME copper prices opened at $8312.5/mt and closed at $8241/mt in overnight trading, a decline of 0.43%, with the low-end of $8212/mt and the high-end of $8309/mt. Trading volume was 22,000 lots, and open interest stood at 260,000 lots. The most active SHFE 2312 copper contract prices opened at 67870 yuan/mt and closed at 67600 yuan/mt last evening, down 0.32%, with the high-end of 68020 yuan/mt and the low-end of 67500 yuan/mt. Trading volumes stood at 25,000 lots and open interest stood at 135,000 lots. On the macro front, initial jobless claims in the United States exceeded expectations last week, rising to 231,000, the highest level in the past three months. Continued jobless claims rose to 1.865 million, the highest level in the past two years. Unemployment data showed weakness in the labor market, reinforcing the view that the Federal Reserve is unlikely to raise interest rates further. In terms of fundamentals, premiums and discounts in East China shot up all the way yesterday. Spot resources were relatively tight after the delivery of the SHFE front-month contract, and premiums rose as expected. However, most downstream companies held a wait-and-see attitude and maintained mainly rigid-need purchases. It is expected that spot tightness will unlikely alleviate in the short term; inventories in South China have increased for two consecutive days, mainly due to high premiums and discounts, lowering downstream purchasing. Affected by high premiums, transactions in South China were poor yesterday. In terms of consumption, in the face of high prices, more companies were mainly replenishing goods as required. Copper prices still face resistance.
Aluminum
The most-traded SHFE 2312 aluminum contract opened at 18980 yuan/mt at Thursday’s night session, with its low and high at 18835 yuan/mt and 18980 yuan/mt before closing at 18845 yuan/mt, down 120 yuan/mt, or 0.63%. LME aluminum opened at $2233/mt in the previous trading day, with its low and high at $2211.5/mt and $2234/mt respectively before closing at $2211.5/mt, down $23.5/mt or 1.05%. On the macro level, the recently released Chinese social finance data and US CPI data continue to boost market confidence. In terms of fundamentals, Yunnan's production reduction coincides with the arrival of the off-season, and both supply and demand are reduced. The reduction on the demand side still needs to be observed. SHFE aluminum may maintain a sideways trend in the short term, and we need to pay close attention to the weakening pace of demand and cost changes caused by raw materials.
Lead
LME lead opened at $2245.5/mt overnight and went downward to $2228.5/mt during the Asian trading hours yesterday, rising to $2286/mt/mt during the European trading hours. It finally closed at $2259.5/mt, up $13.5/mt or 0.6%.
The most-traded lead contract opened at 16905 yuan/mt and grew 265 yuan/mt or 1.59% to close at 16965 yuan/mt, briefly hitting the lowest point at 16870 yuan/mt and the highest point at 17030 yuan/mt.
Zinc
LME zinc opened at $2640/mt yesterday evening, and hit a high of $2644/mt before falling back to $2555/mt, and closed at $2574/mt, a decrease of $63.5/mt or 2.41%. The trading volume increased to 14572 lots, and open interest added 1353 lots to 204,000 lots. LME zinc inventory increased by 65075 mt or 95.5% to 133200 mt. The large delivery of LME zinc positions suppressed the optimism brought about by previous mine production cuts. Currently, the overseas zinc market supply is still ample, and LME zinc is under pressure.
The most active SHFE 2401 zinc contract prices opened at 21500 yuan/mt and fell 320 yuan/mt or 1.47% to close at 21425 yuan/mt trading with the high-end of 21530 yuan/mt and the low-end of 21395 yuan/mt. Trading volumes decreased to 59414 lots and open interest fell 1502 lots to 78596 lots. The market's early optimism has been digested. Although there are good consumption expectations for real estate, the recent actual consumption performance is poor. After the lifting of downstream environmental protection, the improvement in downstream demand is limited. Coupled with the expectation of high operating capacity of smelting plants in the fourth quarter, the fundamentals support are insufficient from zinc prices.
Tin
Tin SHFE 2312 tin contract fell to 213100 yuan/mt overnight and then rose to 214490 yuan/mt, and closed at 212570 yuan/mt, down 0.55%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands did not change much. Small brand tin ingots were offered at premiums of 0-500 yuan/mt, versus premiums of 400-800 yuan/mt for delivery brands, premiums of 900-1100 yuan/mt for Yunxi brand, and discounts of 200-800 yuan/mt imported brand tin ingots. Tin prices rebounded slightly after a drop yesterday. The purchasing enthusiasm of downstream companies was still not high. Generally speaking, the volume of transactions in the spot market yesterday increased moderately compared with the day before.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 139220 yuan/mt, and closed at 138810 yuan/mt, down 410 yuan/mt. Trading volume rose 5586 lots, and open interest increased by 1927 lots. On the macro front, expectations for the Federal Reserve to raise interest rates in December continue to cool down, and the market is optimistic that there will be four interest rate cuts next year. The macro sentiment is good for commodities. From a fundamentals perspective, the trend of pure nickel inventory accumulation remains unchanged, and downstream demand has not yet improved. Yesterday’s spot market transactions were still weak. Nickel price is expected to be rangebound.