SMM Morning Comment For SHFE Base Metals On November 6

SHANGHAI, November 6 (SMM) –

Copper

LME copper opened at $9,734.5/mt overnight, surged initially, then fell back to $9,715/mt, climbed again to $9,782/mt, fluctuated downward towards the end, and finally closed at $9,733/mt, up 0.59%. Trading volume reached 20,000 lots, and open interest reached 275,000 lots. The most-traded SHFE copper 2412 contract opened lower at 77,600 yuan/mt, surged initially, then fluctuated widely, reaching a high of 78,170 yuan/mt during the session, and finally closed at 77,840 yuan/mt, up 0.52%. Trading volume reached 39,000 lots, and open interest reached 170,000 lots. Macro side, the US election officially began. The stock price of Trump Media & Technology Group experienced significant volatility, triggering multiple circuit breakers. Edison Research released exit polls for seven swing states and nationwide. Two swing states showed Trump with a higher approval rating than Harris, four showed Harris with a higher approval rating than Trump, and one showed a tie. Nationwide exit polls showed Harris with a higher approval rating than Trump. The US dollar index hit a recent low, while crude oil prices rose, driving copper prices up. Fundamentally, the influx of imported copper significantly dragged down premiums, while rising copper prices weakened downstream purchasing sentiment. Buyers and sellers lacked confidence in the market outlook. Overall, the two-day US Fed meeting began, the US dollar index opened higher, and copper prices are expected to be under pressure today.

Aluminum

Futures market: The most-traded SHFE aluminum 2412 contract opened at 21,045 yuan/mt overnight, reaching a high of 21,200 yuan/mt and a low of 21,080 yuan/mt, and closed at 21,100 yuan/mt, up 270 yuan/mt or 1.30% from the previous close. The trading volume was 51,000 lots, and the open interest was 206,000 lots, with a daily increase of 1,968 lots. On Tuesday, LME aluminum opened at $2,620/mt, hit a high of $2,663/mt, a low of $2,612/mt, and closed at $2,659/mt, up $38/mt or 1.45%.

Summary: On the macro front, global liquidity remains ample, the Chinese government continues to boost consumption, and the escalating hot war situation supports gold and commodity prices. On the fundamentals side, domestic aluminum supply and demand both saw slight YoY growth, with the supply and demand relationship relatively stable. Social inventory was affected by transportation issues, continuously destocking to below the 600,000 mt mark. Spot alumina supply is tight, and some companies' production cuts and suspensions have caused alumina prices to fluctuate upward, providing strong support for aluminum prices on the cost side. Overall, domestic aluminum remains in a low inventory and high-cost state, and short-term aluminum prices may fluctuate upward.

Lead

Overnight, LME lead opened at $2,035.5/mt, fluctuated rangebound during the Asian session, and slightly rose to $2,048.5/mt during the European session. It then fell to $2,022.5/mt due to long liquidation at the end of the session, finally closing at $2,028.5/mt, down 0.42%, marking the second consecutive decline.

Overnight, the most-traded SHFE lead 2412 contract opened at 16,755 yuan/mt, briefly touched a high of 16,775 yuan/mt at the beginning of the session before plunging to 16,620 yuan/mt, and finally closed at 16,670 yuan/mt, down 0.71%.

Macro side, the 12th meeting of the Standing Committee of the 14th National People's Congress held its second plenary session: the meeting heard reports on financial work by Pan Gongsheng, Governor of the People's Bank of China, entrusted by the State Council, and a comprehensive report on the management of state-owned assets in 2023 by the State Council. The latest data on state-owned assets showed that state-owned enterprise assets totaled 371.9 trillion yuan, financial assets totaled 445.1 trillion yuan, and the total land area was 523.71 million hectares.

Fundamentals, SHFE lead fluctuated rangebound, and the spread between futures and spot prices still has room. The willingness of holders to deliver to warehouses is moderate, and the transfer of delivery brand lead ingots to warehouses is underway, with a slight increase in social inventory of lead ingots. Going forward, we need to pay attention to both the transfer of lead ingots for delivery and the resumption progress of lead smelters after the lifting of smog warnings. In the short term, lead prices are expected to remain fluctuating rangebound.

Zinc

Overnight, LME zinc opened at $3,035/mt. At the beginning of the session, LME zinc briefly dipped to $3,021/mt, and then longs increased their positions, causing LME zinc to fluctuate upward, reaching a high of $3,117.5/mt by the end of the session. It finally closed up at $3,110.5/mt, an increase of $77/mt or 2.54%. Trading volume increased to 11,433 lots, and open interest rose by 895 lots to 251,000 lots. Overnight, LME zinc recorded a large bullish candlestick, with LME inventory decreasing by 1,500 mt to 245,675 mt, a drop of 0.61%. On the macro front, the US Fed's interest rate cut expectations for November resurfaced, the US dollar weakened, and base metals generally rose. LME zinc shifted its focus upward, awaiting more macro guidance, and is expected to fluctuate at high levels today.

Overnight, the most-traded SHFE zinc 2412 contract opened at 25,100 yuan/mt. At the beginning of the session, SHFE zinc briefly dipped to 25,050 yuan/mt, and then longs increased their positions, causing SHFE zinc to fluctuate upward, reaching a high of 25,280 yuan/mt by the end of the session. It finally closed up at 25,240 yuan/mt, an increase of 175 yuan/mt or 0.7%. Trading volume decreased to 68,321 lots, and open interest rose by 2,589 lots to 106,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with macro sentiment resurfacing and the US Fed's interest rate cut expectations rising again. SHFE zinc shifted its focus upward, awaiting more macro guidance, and is expected to fluctuate at high levels today.

Tin

Yesterday, spot market transactions were sluggish, and trading companies' quotations changed little. The premiums and discounts of various domestic tin ingot brands remained stable. Small brand tin ingot was quoted at a discount of 100-0 yuan/mt against the SHFE 2412 contract, delivery brand was quoted at premiums of 0-300 yuan/mt against the SHFE 2412 contract, Yunnan tin brand was quoted at premiums of 500-700 yuan/mt against the SHFE 2412 contract, and imported tin brand was quoted at a discount of 700 yuan/mt against the SHFE 2412 contract. Yesterday, tin prices remained in a high-level sideways trend, with night session tin prices opening high and moving higher, while spot market transactions were sluggish. Downstream enterprises maintained a wait-and-see attitude, with a few downstream enterprises making small purchases yesterday morning. The majority of trading companies maintained scattered transactions, with a few trading companies transacting 20-30 mt. Overall, market sentiment was poor. In general, tin prices remained volatile at high levels, and the spot market response was relatively sluggish.

Nickel

On November 5, Jinchuan nickel was quoted at a premium of 1,700-1,800 yuan/mt, with an average of 1,750 yuan/mt, up 50 yuan/mt compared to the previous trading day. Norilsk nickel was quoted at a discount of 400-0 yuan/mt, with an average of 200 yuan/mt, up 50 yuan/mt compared to the previous trading day. On the morning of November 5, the futures market fluctuated, and the spot market premium saw a slight increase compared to the previous working day. Nickel briquette prices were 123,600-124,000 yuan/mt (out of stock), down 250 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 518.18 yuan/mt (nickel sulphate prices were 518.18 yuan/mt higher than nickel briquette prices).