SMM Morning Comment For SHFE Base Metals On October 9

SHANGHAI, October 9 (SMM) –

Copper

Overnight, LME copper opened at $9,748/mt, initially fluctuated upward to a high of $9,817/mt, then declined to a low of $9,729/mt, and finally slightly rebounded to close at $9,758/mt, a decrease of 1.95%. Trading volume reached 30,000 lots, and open interest reached 300,000 lots. Overnight, the most-traded SHFE copper 2411 contract opened at 77,520 yuan/mt, initially peaked at 77,780 yuan/mt, then fluctuated downward to a low of 77,230 yuan/mt, and finally rebounded to close at 77,510 yuan/mt, a decrease of 0.91%. Trading volume reached 35,000 lots, and open interest reached 163,000 lots. Macro side, the US Fed's bets on significant interest rate cuts have faded. Fed official Bostic stated that if monthly new jobs fall below 100,000, it would raise doubts about considering faster rate cuts. The US dollar index hovered at highs, suppressing copper prices. Meanwhile, a domestic meeting emphasized the urgent implementation of a package of incremental policies. However, due to high copper prices and no significant increase in consumption, copper prices remained under pressure. Fundamentally, post-National Day consumption was better than before the holiday, but due to high copper prices, new orders grew slowly. During the National Day, many companies halted production, reducing consumption. After the holiday, copper cathode inventories significantly increased. Additionally, on the supply side, imported copper is expected to arrive at ports this week, likely pressuring premiums. As of Tuesday, October 8, SMM copper inventories in major regions nationwide increased by 33,400 mt to 198,900 mt compared to before the holiday, due to reduced consumption from some downstream companies taking a few days off during the National Day. In summary, current copper cathode inventories have rebuilt, consumption is weak, and the US dollar index hovered at highs, suggesting that copper prices will lack support today.

Aluminum

Futures market: Overnight, the most-traded SHFE aluminum 2411 contract opened at 20,600 yuan/mt, with a high of 20,625 yuan/mt and a low of 20,505 yuan/mt, and closed at 20,550 yuan/mt, down 145 yuan/mt, a decrease of 0.7%. Yesterday, LME aluminum opened at $2,655.5/mt, reached a high of $2,664.5/mt, a low of $2,564.5/mt, and closed at $2,570.5/mt, down $84/mt, a decrease of 3.17%.

Summary: Macro front, US non-farm payrolls data exceeded market expectations, significantly reducing the market's expectation of a US Fed interest rate cut. The US dollar index fluctuated upward. Domestically, the content of "systematic implementation of a package of incremental policies" theme meeting was slightly below market expectations, cooling macro sentiment but overall remaining positive. Fundamentally, domestic aluminum supply slightly increased, and production cut expectations in Yunnan decreased. Cost side, spot alumina remains in tight balance, making domestic aluminum costs more likely to rise than fall. Demand side, during the domestic holiday, most large and medium downstream processing enterprises maintained normal operations, and post-holiday demand in sectors like new energy and photovoltaics continues to perform well, boosting future aluminum market consumption expectations. Overall, in the context of expected global financial easing and stable fundamentals, the aluminum market is expected to fluctuate upward in the short term. Future attention should be paid to post-holiday domestic consumption conditions and changes in international macro sentiment.

Lead

Overnight, LME lead opened at $2,151/mt, briefly touched a high of $2,156/mt, then fluctuated downward to a low of $2,085/mt, and slightly rebounded to close at $2,106/mt, down $47/mt, a decrease of 2.18%.

Overnight, the most-traded SHFE lead 2411 contract opened at 16,825 yuan/mt, briefly touched a high of 16,945 yuan/mt, then fluctuated downward to a low of 16,740 yuan/mt, later rebounded above the daily moving average, and finally closed at 16,900 yuan/mt, down 65 yuan/mt, a decrease of 0.38%.

Macro side, concerns over geopolitical tensions boosted market risk aversion sentiment, causing the US dollar index to fluctuate upward, putting pressure on LME base metals. On October 8, the State Council Information Office announced a series of incremental policies to continuously boost domestic confidence and market consumption. Fundamentals side, after the National Day holiday, lead industry chain enterprises resumed normal production, but the initial post-holiday trading day saw SHFE lead jump initially and then pull back, leading downstream enterprises to adopt a wait-and-see attitude. Entering October, the delivery of the SHFE lead 2410 contract is on the agenda, and holders have begun transferring lead ingots to delivery warehouses, causing social inventory of lead ingots to rise. Downstream procurement enthusiasm is recovering slowly, but with the resumption of production and new capacity from lead smelters in October, along with pre-delivery inventory transfers, the increase in social inventory of lead ingots may be difficult to reverse.

Zinc

Overnight, LME zinc opened at $3,173/mt. Initially, it briefly rose to $3,190.5/mt, but then shorts increased their positions, causing LME zinc to fluctuate downward, reaching a low of $3,066.5/mt during the night session. It eventually closed down at $3,076.5/mt, a decrease of $103.5/mt, or 3.25%. Trading volume increased to 15,828 lots, and open interest rose by 1,147 lots to 261,000 lots. Overnight, LME zinc recorded a large bearish candlestick, with LME inventory decreasing by 1,700 mt to 242,400 mt, a drop of 0.7%. Macro sentiment has weakened, with expectations for further US interest rate cuts diminishing, combined with the fading of positive domestic policy sentiment, impacting LME zinc. It is expected to fluctuate today.

Overnight, the most-traded SHFE zinc 2411 contract opened at 25,360 yuan/mt. Initially, it briefly touched 25,365 yuan/mt, but then shorts increased their positions, causing SHFE zinc to fluctuate downward, reaching a low of 25,045 yuan/mt before slightly correcting upwards. It eventually closed down at 25,160 yuan/mt, a decrease of 125 yuan/mt, or 0.49%. Trading volume decreased to 75,422 lots, and open interest increased by 806 lots to 117,000 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the optimism from domestic policy support somewhat fading, combined with the accumulation of zinc social inventory. Actual downstream consumption still exerted pressure on SHFE zinc's trend, causing its focus to shift downward. SHFE zinc is expected to fluctuate today.

Tin

Yesterday, the most-traded SHFE tin contract closed at 265,040 yuan/mt, down 3,250 yuan/mt, a decrease of 1.21%, with a high of 267,260 yuan/mt and a low of 264,170 yuan/mt.

During yesterday's morning session, trading companies' quotes for domestic tin ingot brands showed little change compared to recent days. Small brand tin ingots were quoted at premiums of 0-500 yuan/mt against the SHFE 2411 contract, delivery brand at premiums of 200-700 yuan/mt, Yunnan Tin brand at premiums of 600-900 yuan/mt, and imported tin brands at discounts of 400-200 yuan/mt against the SHFE 2411 contract. In the morning session, tin prices fluctuated at high levels, and with previous restocking being sufficient, buying interest was low. Many trading companies transacted less than ten mt, with a few trading companies transacting 1-2 truckloads. Overall, the spot market transactions were relatively sluggish yesterday.

Nickel

On October 8, Jinchuan nickel was quoted at a premium of 1,300-1,500 yuan/mt, with an average of 1,400 yuan/mt, unchanged from the previous trading day. Norilsk nickel was quoted at a discount of 500-200 yuan/mt, with an average of 350 yuan/mt, up 50 yuan/mt from the previous trading day. October 8, the first day after the holiday, saw the futures market open high, boosted by sentiment, but later retreated. Nickel briquette prices were 134,400-135,100 yuan/mt, up 3,400 yuan/mt from the previous day.