SMM Morning Comment For SHFE Base Metals November 16

SHANGHAI, November 16(SMM) –
Copper
LME copper prices opened at $8257/mt overnight before reaching a low of $8233.5/mt and a high of $8291/mt, and closed at $8276.5/mt, a rise of 0.78%. Trading volumes were 21,000 lots and open interest stood at 262,000 lots. The most active SHFE 2312 copper contract prices opened at 67940 yuan/mt and finished at 67910 yuan/mt overnight, up 0.28%, with the low-end of 67700 yuan/mt and the high-end of 67990 yuan/mt. Trading volume was 23,000 lots and open interest stood at 140,000 lots. On the macro front, retail sales in the US recorded -0.1% in October, compared to the expected -0.3%. The U.S. PPI index in October was weaker than expected, recording -0.5%, the largest decline since April 2020. In terms of fundamentals, in East China yesterday, as most sellers began to quote against the next month contract, spot quotes rose. However, as the price difference between the front-month and next-month contracts widened, downstream acceptance gradually declined, and sellers did not continue to increase premiums. It is expected that the downstream purchase will be poor after the delivery of the SHFE front-month contract; the South China market also performed poorly. With delivery approaching, the enthusiasm for downstream purchasing dropped significantly. Sellers also lowered prices, but the overall transaction volume was still average. Downstream purchases will pick up to a certain extent after the delivery of the SHFE front-month contract. There will be limited room for copper price increases.
Aluminum
The most-traded SHFE 2312 aluminum contract opened at 19030 yuan/mt at Wednesday’s night session, with its low and high at 18915 yuan/mt and 19030 yuan/mt before closing at 18955 yuan/mt, down 40 yuan/mt, or 0.21%. LME aluminum opened at $2222.5/mt in the previous trading day, with its low and high at $2221/mt and $2238.5/mt respectively before closing at $2235/mt, up $11/mt or 0.49%.
From a macro perspective, 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 prices opened at $2203/mt and gained $36.5/mt or 1.65% last evening, with the high-end of $2251/mt.
The most-traded lead contract opened at 16550 yuan/mt and rose to the highest point at 16810 yuan/mt yesterday evening. SHFE lead finally closed at 16790 mt, up 330 yuan/mt or 2% overnight.
Zinc
Last evening, LME zinc prices opened at $2606/mt and went up to close at $2637.5/mt, up $30.5/mt or 1.17%. Trading volume increased to 12465 lots, and open interest decreased 2010 lots to 202,000 lots. LME zinc inventory dropped by 1100 mt or 1.59% to 68125 mt. The U.S. PPI data in October was weaker than expected, indicating that rising inflation is showing signs of fading. The U.S. retail sales monthly rate in October was stronger than expected but fell for the first time in July. The fall in both data continued to strengthen expectations for the ending of the Federal Reserve's interest rate hikes.
The most active SHFE 2312 zinc contract prices opened at 22010 yuan/mt and gained 25 yuan/mt or 0.11% to settle at 21835 yuan/mt in overnight trading with the high-end of 22040 yuan/mt and the low-end of 21870 yuan/mt. Trading volumes decreased to 56247 lots and open interest fell 463 lots to 88529 lots. The Domestic Bureau of Statistics announced that the year-on-year growth rate of industrial added value above designated size in October rebounded better than expected, and the national economy is improving. However, the strong supply and weak demand weakened the fundamental support for zinc prices.
Tin
SHFE 2312 tin contract fell to 213640 yuan/mt overnight and then rose to 214260 yuan/mt, and closed at 214050 yuan/mt, up 0.14%.
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 300-800 yuan/mt for delivery brands, premiums of 900-1100 yuan/mt for Yunxi brand, and discounts of 200-600 yuan/mt imported brand tin ingots. Yesterday, tin prices fluctuated sideways and maintained at a relatively high level in recent days. Most downstream companies took a wait-and-see attitude except for urgent purchases. There were few transactions in the trade market. A small number of trading companies traded around 50 mt, and most trading companies saw scattered transactions.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 138710 yuan/mt, and closed at 139300 yuan/mt, up 1030 yuan/mt. On the macro front, the United States announced that the annual rate of non-seasonally adjusted CPI in October was 3.2%, which was lower than the previous value and market expectations. This reflects that the current inflation level in the U.S. market has declined, and the market has become optimistic about subsequent Fed monetary policy. 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.