SMM Morning Comment For SHFE Base Metals (Nov 14)

SHANGHAI, Nov 14 (SMM) –

Copper

US October CPI Data Meets Expectations, Strong US Dollar Index Continues to Pressure Copper Prices [SMM Copper Morning Comment]

LME copper opened at $9,121.5/mt overnight, initially reaching a high of $9,142.5/mt before declining throughout the session. Near the close, it briefly rebounded but continued to fall, touching a low of $9,006/mt and finally closing at $9,007.5/mt, down 1.5%. Trading volume reached 30,000 lots, and open interest was 278,000 lots. The most-traded SHFE copper 2412 contract opened at 74,080 yuan/mt overnight, initially reaching a high of 74,430 yuan/mt before declining throughout the session and then touching a low of 73,720 yuan/mt. Near the close, it briefly rebounded and finally closed at 73,960 yuan/mt, down 0.98%. Trading volume reached 42,000 lots, and open interest was 152,000 lots. Macro side, the US October unadjusted CPI year-on-year rate was 2.6%, meeting market expectations and reaching a three-month high, ending a six-month decline. The US dollar index continued to rise, hitting a new high for the year, further pressuring copper prices. Several US Fed officials expressed uncertainty about the extent of interest rate cuts, indicating they would act more cautiously and might pause during the rate-cutting cycle. Fundamentally, as copper prices fell sharply, trading activity in the spot market picked up. Traders stood firm on quotes, and downstream purchasing sentiment was relatively positive, supporting an increase in spot premiums. Given the tight supply of domestic copper cathode, spot premiums are expected to remain firm today. Price side, uncertainty remains over whether the US Fed will cut interest rates in December. The market is waiting for upcoming economic data, with overall cautious sentiment prevailing. Copper prices are expected to fluctuate downward today.

Aluminum

CPI data meets expectations, US dollar index hits new high for the year, LME aluminum under pressure [SMM Aluminum Morning Meeting Summary Nov 14]

Overnight, the most-traded SHFE aluminum 2412 contract opened at 20,765 yuan/mt, reaching a high of 20,820 yuan/mt and a low of 20,680 yuan/mt, and closed at 20,755 yuan/mt, down 65 yuan/mt from the previous close, a decrease of 0.31%. The trading volume was 44,200 lots, and the open interest was 151,400 lots, with a daily reduction of 3,500 lots. On the previous trading day, LME aluminum opened at $2,565/mt, reached a high of $2,569/mt, a low of $2,518/mt, and closed at $2,528/mt, down $35/mt, a decrease of 1.73%.

Summary: Macro side, the US October non-seasonally adjusted CPI year-on-year was 2.6%, meeting market expectations, reaching a three-month high, halting a six-month decline. The US dollar index continued to rise, hitting a new high for the year, and base metals continued to adjust downward. Meanwhile, several US Fed officials expressed deep uncertainty about the extent of interest rate cuts, which would make them more cautious and possibly take a pause during the rate cut cycle. Domestically, new real estate policies were introduced, with increased deed tax discounts and VAT exemptions expected to boost the real estate industry. On the fundamentals side, domestic aluminum ingot inventory remained below 600,000 mt during the week. Recently, transportation in north-west China has improved, forcing a halt to the continuous destocking trend of aluminum ingot inventory, with an initial inventory turning point forming. Low inventory support for aluminum prices may gradually weaken. Alumina spot supply remains tight, coupled with production disruptions from some companies, but the Nonferrous Metals Association's comments on the current significant alumina fluctuations have slightly eased market sentiment, leading to high-level adjustments in alumina prices. Overall, domestic aluminum remains in a low inventory and high-cost state, but the support strength has weakened. In the short term, aluminum prices may fluctuate upward, with continued attention to macro sentiment changes and alumina price fluctuations domestically and internationally.

Lead

Inventory Accumulation vs. Limited Circulating Goods: Lead Price Rally May Slow Down [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,022.5/mt. During the Asian session, buoyed by the rise in SHFE lead, LME lead fluctuated between $2,027-2,037/mt. Entering the European session, the US dollar index continued to rise, hitting a nearly one-year high, putting pressure on base metals. LME lead also dropped, hitting a low of $2,003/mt, the lowest in nearly half a month, and finally closed at $2,010/mt, down 0.69%.

Overnight, the most-traded SHFE lead 2412 contract opened at 17,140 yuan/mt. With the accumulation of lead warehouse warrant inventory, SHFE lead plunged at the beginning of the session, falling to 17,055 yuan/mt. In the spot market, the limited circulating goods contrasted sharply with the high inventory in the delivery warehouse, leading to a stalemate between long and short positions. In the latter part of the trading session, SHFE lead consolidated between 17,070-17,100 yuan/mt. It finally closed at 17,115 yuan/mt, down 0.35%; open interest was 43,123 lots, a decrease of 1,279 lots from the previous trading day.

Macro side, three Chinese departments issued new tax incentives for the real estate market: the area standard for enjoying the current 1% low tax rate was raised from 90 m² to 140 m²; the lower limit of the land value-added tax pre-collection rate in various regions was uniformly reduced by 0.5 percentage points. US October CPI accelerated YoY to a three-month high but met expectations. Wall Street commentary: next month's interest rate cut is almost certain, but next year's rate cut pace may slow due to Trump's policies. US Fed officials said inflation is moving in the right direction.

Fundamentally, with the SHFE lead 2411 contract delivery approaching, SHFE lead warehouse warrant inventory is increasing daily, and the increase in visible inventory is limiting the upside potential of lead prices. Meanwhile, after a significant rise in lead prices, downstream enterprises are mostly adopting a wait-and-see attitude, which is not conducive to lead ingot destocking. However, in the short term, the circulating goods in the lead spot market are still limited. Attention should continue to be paid to the resumption of production by secondary lead enterprises and the changes in the premiums and discounts of secondary refined lead.

Zinc

SHFE Zinc Prices Rise, Attention on Subsequent Inflows of Imported Zinc Ingots [SMM Zinc Morning Comment Nov 14]

US CPI met market expectations, raising expectations for a December interest rate cut; officials said Iran had withdrawn its decision to retaliate against Israel; rumors suggest Israel wants to present Trump with a diplomatic gift of a Lebanon-Israel ceasefire; new housing transaction tax policies were announced; CICC and Galaxy responded to merger rumors: unknown.

Overnight, LME zinc opened at $2,948/mt, initially moving downward along the daily moving average to a low of $2,905/mt. LME zinc then rebounded from the low, twice surging to a high of $2,993/mt, before dropping back slightly and closing up at $2,970.5/mt, up $24/mt, or 0.81%. Trading volume increased to 11,929 lots, and open interest rose by 2,835 lots to 247,000 lots. Overnight, LME zinc recorded a bullish candlestick, with support from the lower Bollinger Band. LME zinc inventory decreased by 2,300 mt to 243,225 mt, a drop of 0.94%. The US October non-seasonally adjusted CPI rose to 2.6% MoM, meeting market expectations, raising expectations for a December interest rate cut by the US Fed, and LME zinc rebounded during the session.

Overnight, the most-traded SHFE zinc 2412 contract opened at 24,675 yuan/mt, initially dipping to 24,665 yuan/mt, then fluctuating around the daily moving average, and nearing the close, it surged to a high of 24,995 yuan/mt, finally closing up at 24,925 yuan/mt, up 340 yuan/mt, or 1.38%. Trading volume decreased to 109,000 lots, and open interest increased by 1,970 lots to 106,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with resistance from the 40-day moving average. Driven by the overseas market, SHFE zinc also rose during the night session. However, with the recent opening of the zinc ingot import window, domestic zinc ingot supply may be somewhat supplemented, potentially weakening the support for zinc prices from the supply side. Attention should be paid to subsequent inflows of imported zinc ingots.

Tin

SHFE tin moved sideways during the night session, spot tin market saw brisk trading (SMM tin morning comment Nov 14)

Yesterday, the quotations from trading companies remained stable without significant fluctuations. The price range of tin ingots from various domestic brands was relatively fixed, with small-brand tin ingots and imported tin ingots showing a slight discount against the SMM 1# tin ingot price, while delivery brand prices and Yunnan Tin brand tin ingots showed a slight premium against the SMM 1# tin ingot price. In yesterday's market, SHFE tin prices continued to decline, maintaining low-level fluctuations during the night session. Most downstream companies replenished their stocks in large quantities, and some downstream companies engaged in pricing. As for trading companies, most had a trading volume of around 30 mt, with a few companies reaching a trading volume of 3-7 trucks. Overall, the market trading atmosphere was brisk.

Nickel

On November 13, Jinchuan nickel was quoted at a premium of 1,800-2,000 yuan/mt, with an average of 1,900 yuan/mt, remaining flat compared to the previous trading day. Norilsk nickel was quoted at a discount of 400-100 yuan/mt, with an average of 250 yuan/mt, down 50 yuan/mt from the previous trading day. On the morning of November 13, the futures market fluctuated downward, and the spot market premium changed little compared to the previous working day. Nickel briquette prices were 125,700-126,000 yuan/mt (out of stock), down 1,750 yuan/mt from the previous trading day. The price spread between nickel sulphate and nickel briquette was about 2,782 yuan/mt (nickel sulphate prices were 2,782 yuan/mt lower than nickel briquette prices).