SMM Morning Comment For SHFE Base Metals October 25

SHANGHAI, October 25(SMM) –
Copper
SMM Copper morning comment
LME copper prices opened at $7977/mt and closed at $8077/mt in overnight trading, a gain of 1.15%, with the low-end of $7936.5/mt and the high-end of $8080/mt. Trading volume was 20,000 lots, and open interest stood at 269,000 lots. The most active SHFE 2312 copper contract prices opened at 66530 yuan/mt and finished at 66770 yuan/mt last evening, up 0.86%, with the low-end of 66390 yuan/mt and the high-end of 66930 yuan/mt. Trading volume was 47,000 lots, and open interest stood at 151,000 lots. On the macro front, the preliminary Markit service PMI in the United States in October recorded 50.9, a new high since September 2022. The eurozone's preliminary composite PMI fell from 47.2 to 46.5 in October, the lowest level since November 2020. European Central Bank President Christine Lagarde told EU officials that efforts to combat inflation are going well. In terms of fundamentals, shipments in East China were brisk last weekend, and the supply of tradable goods was relatively tight this week. Coupled with the lower copper prices, downstream purchasing enthusiasm increased. Premiums and discounts rose accordingly. Inventories in South China have declined, and the price difference between Shanghai and Guangdong has narrowed. The supply of goods going to the south will decrease. Sellers raised prices, but the downstream acceptance was not high. Prices will remain at low levels in the near term.
Aluminum
The most-traded SHFE 2312 aluminum contract opened at 18820 yuan/mt in last night trading session, with the lowest and highest at 18800 yuan/mt and 19000 yuan/mt before closing at 18980 yuan/mt, up 170 yuan/mt, or 0.90%. Three-month LME aluminum opened at $2178/mt last evening and closed at $2206/mt, a rise of $30/mt or 1.38%.
China's additional issuance of government bonds and the decline in crude oil prices have brought positive boosts. However, short-term expectations of the Federal Reserve's interest rate hikes and the Palestinian-Israeli conflict has intensified, increasing market uncertainty. Fundamentally, the current operating capacity of the refined aluminum supply side is 42.94 million tons, which is close to the peak. It is difficult to expect a significant increase in the short term. After the Mid-Autumn Festival and National Day holidays, downstream orders and demand have improved but were not as good as expected. Shipments of aluminum ingots and aluminum billet decreased last week. The social inventory of aluminum ingots has not seen a continuous decline. In the short term, aluminum prices are expected to fluctuate rangebound.
Lead
SMM lead morning comment
Data source: SMM
SHANGHAI, Oct 25 (SMM) -
LME lead prices opened at $2104/mt and closed with gains of $2.5/mt or 0.12% last evening, with the high-end of $2120/mt and the low-end of $2100/mt.
The most-traded lead contract opened at 16435 yuan/mt and grew 30 yuan/mt or 0.18% to close at 16490 yuan/mt, briefly hitting the lowest point at 16415 yuan/mt and the highest point at 16525 yuan/mt.
Zinc
SMM zinc morning comment
Data source: Overnight, LME zinc opened at $2433.5/mt and closed up $28.5/mt or 1.17% at $2458.5/mt. The trading volume was 6647 lots, and open interest added 112 lots to 203,000 lots. A series of solid corporate earnings and optimistic financial forecasts stimulated investors' risk appetite and pushed the market generally higher. The strong financial reports of U.S. companies overshadowed concerns about the pessimistic economic data in the Eurozone. Nonferrous metals generally rose, and zinc futures followed suit.
Last evening, the most active SHFE 2312 zinc contract prices opened at 20980 yuan/mt and closed at 21025 yuan/mt, up 140 yuan/mt or 0.67%. Trading volume stood at 62,000 lots, and open interest gained by 3288 lots to 77,000 lots. Domestic spot trading has gradually weakened, and the lackluster performance on the consumer side has limited support for zinc prices. However, the performance of U.S. economic data and strong financial reports of overseas companies have driven sentiment to a certain extent.
Tin
SMM Tin Morning Comment
Data source: SMM
The price of the most active SHFE 2311 tin contract rose rapidly after opening in overnight trading session, reaching a high of 216000 yuan/mt. The prices then fluctuated rangebound and finally closed at 215820 yuan/mt last evening, up 0.89%.
Nickel
On October 24, the most active SHFE nickel contract prices opened at 148200 yuan/mt and closed at 147560 yuan/mt, a decrease of 1150 yuan/mt from the closing price of the previous trading day. The intraday trading was weaker than that of the previous trading day. The trading volume decreased by 3988 lots, and the open interest decreased by 1704 lots. The longs were actively closing their positions. The decrease in trading volume shows that longs were more rational in closing positions. Therefore, the prices dropped moderately, and the probability of a sustained decline is high. On the macro front, Federal Reserve officials frequently made dovish statements, and expectations for interest rate hikes by the Federal Reserve continued to cool. The market's expectations that the interest rate range will remain unchanged in November and December rose to 89.6% and 70.5%. From a fundamental perspective, spot market transactions continued to weaken, and overall demand declined. In summary, it is expected that the nickel price may fall further in the near term.