SMM Morning Comment For SHFE Base Metals November 15

Copper

LME copper prices opened at $8182.5/mt and closed at $8212.5/mt in overnight trading, a gain of 0.31%, with the low-end of $8167/mt and the high-end of $8275/mt. Trading volume was 25,000 lots, and open interest stood at 265,000 lots. The most active SHFE 2312 copper contract prices opened at 67550 yuan/mt and finished at 67660 yuan/mt overnight, up 0.33%, with the low-end of 67550 yuan/mt and the high-end of 67910 yuan/mt. Trading volume was 31,000 lots and open interest stood at 145,000 lots. On the macro front, both the overall CPI and core CPI in the United States were lower than expected. The non-seasonally adjusted CPI annual rate in October was 3.2%, and the core CPI was 0.2%. Interest rate futures pricing indicates that the Fed's current interest rate hike cycle has completely ended, and it is expected to cut interest rates by a cumulative 100 basis points by the end of next year, with the first round of interest rate cuts as early as May. In terms of fundamentals, the overall transaction volume in East China yesterday was weak. As delivery is approaching, downstream purchasing willingness was not high due to the high price difference between the front-month and next-month contracts. It is expected that premiums and discounts before delivery will remain low; in South China, due to the small arrival of goods and large shipments, inventory has once again fell and hit a new low for the year. Therefore, although copper prices rose yesterday, the sellers kept prices firm, but the downstream mainly maintained on-demand purchases and could not accept the current high premium. Demand is expected to remain weak. In terms of price, copper prices will rebound slightly due to the cooling of U.S. inflation.

Aluminum

The most-traded SHFE 2312 aluminum contract opened at 18940 yuan/mt overnight, with its low and high at 18940 yuan/mt and 19130 yuan/mt before closing at 19060 yuan/mt, up 95 yuan/mt or 0.50%. LME aluminum opened at $2235/mt in the previous trading day, with its low and high at $2214/mt and $2244.5/mt respectively before closing at $2224/mt, down $6/mt or a decrease of 0.27%.

On the macro level, the newly released U.S. CPI data has provided support for aluminum prices. Domestic favorable policies continue to boost the domestic economy. China’s October social financing data far exceeded expectations, boosting 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 is expected to move sideways short-term.

Lead

LME lead open at $2169/mt and stabilised during the Asian trading hours yesterday. It fell to $2156/mt during the European trading hours, and finally rose and closed at $2209.5/mt, up $41/mt or 1.89%.
The most-traded SHFE 2312 lead contract opened at 16415 yuan/mt and rose to the highest point at 16545 yuan/mt. SHFE lead fell slightly and finally closed at 16525 mt 65 yuan/mt or 0.39% overnight.

Zinc

Overnight, LME zinc opened at $2535/mt, hitting a low and high of $2535/mt and $2615.5/mt respectively, and closed at $2607/mt, up $57/mt or 2.24%. LME zinc stocks were unchanged at 69,225 mt. Both the overall CPI and core CPI in the United States were lower than expected, boosting hopes that the Federal Reserve has completed raising interest rates. The U.S. dollar index fell sharply.
The most-traded SHFE 2312 zinc contract opened at 21620 yuan/mt overnight and touched a high of 21850 yuan/mt before falling and closing at 21800 yuan/mt, up 220 yuan/mt or 1.02%. The domestic market is driven by the external market. According to Bloomberg, China plans to provide at least 1 trillion yuan in low-cost financing for urban village renovation and affordable housing projects across the country. The People's Bank of China will inject capital in banks in stages, and the funds will eventually flow to home-buying households.

Tin

SHFE 2312 tin contract fell to 212290 yuan/mt overnight and then rose to 214640 yuan/mt, and closed at 214240 yuan/mt, up 0.17%.

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 400-700 yuan/mt for delivery brands, premiums of 1000-1100 yuan/mt for Yunxi brand, and discounts of 100-600 yuan/mt imported brand tin ingots. Tin prices fluctuated sideways yesterday, and downstream companies still had a strong wait-and-see attitude and no strong willingness to purchase. There were few transactions in the trading market. Generally speaking, the spot market transactions yesterday were relatively thin.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 138430 yuan/mt, and closed at 138240 yuan/mt, down 1390 yuan/mt. Trading volume fell by 70812 lots, and open interest decreased by 3135 lots. On the macro front, the Chairman of the Federal Reserve continued to be hawkish in his speech, but this did not affect the market's expectation that interest rates will remain unchanged in December. 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 move rangebound.