SMM Morning Comment For SHFE Base Metals November 30

SHANGHAI, November 30(SMM) –
Copper
LME copper prices opened at $8,471/mt and closed at $8445/mt in overnight trading, a drop of 0.07%, with the low-end of $8408/mt and the high-end of $8496.5/mt. Trading volume was 19,000 lots and the open interest stood at 267,000 lots. The most active SHFE 2401 copper contract prices opened at 68200 yuan/mt and closed at 67990 yuan/mt last evening, down 0.23%, with the high-end of 68330 yuan/mt and the low-end of 67900 yuan/mt. Trading volumes stood at 28,000 lots and open interest stood at 164,000 lots. On the macro front, the U.S. economic growth rate in the third quarter was higher than market expectations, and the U.S. dollar index stopped falling and rebounded. The market is waiting for the upcoming PCE data, which will guide the subsequent trend of copper prices. In terms of fundamentals, the premiums and discounts in East China fell yesterday. Although production cut at some refineries led to tight supply, with the supply supply in the north being replenished and the market price running at a high level, downstream purchasing was weak, weighing on premiums and discounts; inventories in South China gradually increased as the supply of imported copper and domestic copper grew. High spot quotes forced many processing companies to reduce or suspend production. Sellers lowered prices, but the overall transaction volume was quiet. In terms of consumption, high premiums and high market prices have suppressed downstream purchasing sentiment. Overall, mine-side disruptions and refinery maintenance have resulted in tight supply, and premiums and discounts will remain strong in the short term. Copper prices are expected to remain strong.

Aluminum
Overnight, the most-traded SHFE 2401 aluminum contract opened at 18565 yuan/mt, with low and high at 18520 yuan/mt and 18615 yuan/mt before closing at 18600 yuan/mt, down 50 yuan/mt or 0.27%. LME aluminum opened at $2224/mt in the previous trading day, with its low and high at $2207.5/mt and $2231.5/mt respectively before closing at $2217.5/mt, down 0.18%.
On the macro level, as the U.S. economic growth in the third quarter once again exceeded expectations, the U.S. dollar index rebounded from a low of more than three months, but failed to stabilize at the 103 mark. At the same time, geopolitical risks in the Middle East have eased, expectations for further interest rate hikes by the Federal Reserve have cooled. Overseas market sentiment has tended to be positive recently. In terms of fundamentals, aluminum ingot inventory has entered a downward trend. Due to aluminum production cuts in Yunnan, domestic operating production capacity has dropped to around 41.8 million mt, easing supply-side pressure. Due to recent exchange rate fluctuations, the import window has shown signs of opening. The inflow of imported goods will add to domestic supply. The performance of downstream operating rates is weak in the off-season. The PMI for domestic aluminum processing sectors was below 50%, indicating contraction territory, with production and order index both weak. SMM believes that the sharp intraday drop in SHFE aluminum on Wednesday was mainly affected by the recent poor downstream consumption and the concentrated entry of shorts for hedging. Short-term aluminum prices may struggle to find further support.
Lead
Overnight, LME lead opened at $2156/mt. Dragged down by SHFE lead, LME lead prices inched lower. Prices fell to as low as $2126/mt as LME lead inventory increased by nearly 6,000 mt. At last, the contract closed at $2142/mt, down 0.44%.
Overnight, the most active SHFE 2401 lead contract opened at 15965 yuan/mt. Due to the growth in lead warrants inventory, SHFE lead dropped to 15825 yuan/mt, refreshing a new low since August 15, 2023. The contract closed at 15850 yuan/mt, an decrease of 1.22%. Open interest stood at 69216 lots, a rise of 144 lots from the previous trading day.
zinc
Overnight, LME zinc opened at $2542/mt and closed down $40.5/mt or 1.6% at $8584/mt. The trading volume was 8584 lots, and open interest lost 4395 lots to 203,000 lots. The pressure in this year's heating season has been greatly reduced compared with previous years. There is little news about production cuts and overseas supply is stable. However, the market sentiment is unstable.
Overnight, the most-traded SHFE 2401 zinc contract opened at 20915 yuan/mt and fell slightly to close at 20830 yuan/mt, down 235 yuan/mt or 1.12%. Trading volume stood at 57,000 lots, and open interest gained by 4405 lots to 91,000 lots. The recent trading in the spot market has been light. On the one hand, the early reserve stockpile provides support. On the other hand, the pace of winter storage this year has slowed down. There are no orders in the galvanized sector and there is no expectation of improvement. Basically, the support for SHFE zinc is limited.
Tin
SHFE 2401 tin contract fell to 194660 yuan/mt overnight and then rebounded to 197250 yuan/mt, closing at 196580 yuan/mt, up 0.51%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands improved.Small brand tin ingots were offered at premiums of 600-800 yuan/mt over SHFE 2312 tin contract, versus premiums of 600-1,000 yuan/mt for delivery brands, premiums of 900-1300 yuan/mt for Yunxi brand, and discounts of 600 yuan/mt imported brand tin ingots.Tin prices rebounded slightly yesterday, and market transactions cooled down. Most downstream companies took a wait-and-see attitude.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 129160 yuan/mt, and closed at 131110 yuan/mt, up 1950 yuan/mt. Trading volume rose 13596 lots, and open interest increased by 6610 lots. From a macro perspective, the Federal Reserve continues to be dovish and a number of data reflect the economic decline in the US. Market expectations for the Federal Reserve to cut interest rates have increased, boosting commodities. From a fundamental perspective, the pure nickel surplus is expected to persist. Nickel price is expected to move rangebound.