SMM Morning Comment For SHFE Base Metals (Nov 15)

SHANGHAI, Nov 15 (SMM) –

Copper

Powell Says Fed Not in a Hurry to Cut Interest Rates, Copper Prices Expected to Fluctuate at Low Levels Today [SMM Copper Morning Comment]

LME copper opened at $8,881/mt overnight, initially dipped to $8,872/mt, then climbed throughout the session, reaching a high of $9,024.5/mt near the close, and finally settled at $9,024/mt, up 0.18%. Trading volume reached 34,000 lots, and open interest was 280,000 lots. The most-traded SHFE copper 2412 contract opened at 73,150 yuan/mt overnight, initially dipped to 73,060 yuan/mt, then climbed throughout the session, reaching a high of 73,770 yuan/mt, and consolidated sideways near the close, finally settling at 73,610 yuan/mt with no change. Trading volume reached 40,000 lots, and open interest was 150,000 lots. Macro side, the US October PPI year-on-year recorded 2.4%, higher than the expected 2.3%, with the previous value revised up from 1.8% to 1.9%. Initial jobless claims for the week ending November 9 in the US recorded 217,000, the lowest since the week ending May 18, 2024. Fed Chairman Powell stated that the recent US economic performance has been very good, indicating that the Fed does not need to rush to cut interest rates. Kugler mentioned that if progress in reducing inflation stalls, it might require pausing interest rate cuts, which may stabilize copper prices. Fundamentally, yesterday was the last day of the "Asia Copper Week" conference, and most market participants were inactive. However, due to the continuous decline in copper prices, downstream demand performed well, and social inventories kept decreasing. According to SMM data, as of Thursday, November 14, SMM copper inventories in major regions nationwide decreased by 114,000 mt compared to Monday to 164,000 mt, and decreased by 28,000 mt compared to last Thursday, marking the fourth consecutive week of weekly destocking, with the destocking speed accelerating. Price side, current copper prices are mainly suppressed by the strengthening US dollar. Due to Powell's speech in the morning, the US dollar index might rise again. Copper prices are expected to fluctuate at low levels today, with continued attention needed on macro sentiment.

Aluminum

The US Fed's Hawkish Stance Overnight, SHFE Aluminum Rebounded Slightly [SMM Aluminum Morning Briefing Nov 15]

Overnight, the most-traded SHFE aluminum 2412 contract opened at 20,635 yuan/mt, reaching a high of 20,855 yuan/mt and a low of 20,635 yuan/mt, closing at 20,770 yuan/mt, up 100 yuan/mt or 0.48% from the previous close. The trading volume was 56,400 lots, and the open interest was 142,500 lots, with a daily reduction of 3,900 lots. On the previous trading day, LME aluminum opened at $2,529.5/mt, hitting a high of $2,563/mt and a low of $2,485/mt, closing at $2,523.5/mt, down $7/mt or 0.28%.

Summary: Macro side, the US October PPI annual rate was slightly higher than expected, coupled with the initial jobless claims for the week hitting a six-month low, the US dollar index maintained an upward trend, and base metals remained under pressure. Late at night, US Fed officials delivered hawkish remarks, indicating no rush to cut interest rates, leading the market to reduce bets on a December rate cut. Domestically, new housing policies were introduced, with increased deed tax discounts and VAT exemptions expected to boost the real estate sector. Supply side, transportation in north-west China improved during the week, interrupting the continuous destocking trend of aluminum ingot inventory, forming an initial inventory inflection point. Low inventory may gradually weaken support for aluminum futures prices. Alumina spot supply remained tight, coupled with production cuts or suspensions by some enterprises. However, recent official statements regarding the alumina market led to a decline in alumina futures sentiment, resulting in a divergence between futures and spot prices. Overall, domestic aluminum remains at low inventory levels with rising costs, but the support strength has weakened. Aluminum prices are expected to consolidate next week.

Lead

Supply Factors Exhausted, Lead Prices to Focus on Consumption Recovery [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,008.5/mt. Under strong pressure from the US dollar, LME lead fluctuated downward throughout the day. Especially during the European session, the US dollar index surged, hitting a new high in over a year, causing base metals to generally decline. LME lead also dropped again, hitting a nearly two-month low of $1,958/mt. It finally closed at $1,964/mt, down 2.29%.

Overnight, SHFE lead warehouse warrant inventory increased again. The most-traded SHFE lead 2412 contract opened at 16,850 yuan/mt. Dragged down by the decline in LME lead, longs exited en masse after the opening, causing SHFE lead to quickly drop to 16,755 yuan/mt, nearly erasing all gains from the past week. During the session, SHFE lead attempted to regain 16,800 yuan/mt but failed, fluctuating downward in the latter half of the trading session. It finally closed at 16,790 yuan/mt, down 1.35%. Its open interest was 36,864 lots, a decrease of 3,165 lots from the previous trading day.

Macro side, Fed Chairman Powell stated that the economy is strong, and the US Fed does not need to rush to cut interest rates, having time to understand the impact of Trump's policies. Where is the endpoint of this round of interest rate cuts by the US Fed? Goldman Sachs: around 3.25%-3.5%, about 100 basis points higher than the peak of the last cycle. US October PPI rose across the board, up 2.4% YoY, higher than expected, with increased stickiness in the service sector. The number of initial jobless claims in the US last week fell to 217,000, below expectations.

Fundamentals side, today is the delivery day for the SHFE lead 2411 contract. The visible inventory increase brought by lead ingot delivery continues to drag down lead prices. After this week's lead price rise, secondary lead profits have recovered, and smelters are gradually resuming production. Additionally, the smog warnings in Hebei, Henan, and other regions will be lifted, potentially leading to a phased increase in lead ingot supply next week. Lead ingot social inventory is expected to continue rising. Furthermore, we need to pay attention to the restocking actions of downstream enterprises after lead prices jump initially and then pull back.

Zinc

Supply Side Still Supported, SHFE Zinc Rebounds in Night Session [SMM Zinc Morning Comment Nov 15]

Powell: The US Fed does not need to rush to cut interest rates; Iranian Army Commander: Response to Israel will be "devastating"; US Republicans win control of the House of Representatives; China issues $2 billion sovereign bonds in Saudi Arabia for the first time; Head of 6G Promotion Group: 6G technology standard research will start in June next year; Precious metal prices continue to be volatile.

Overnight, LME zinc opened at $2,965/mt, initially reaching a high of $2,970/mt. After the opening, it fell all the way to a low of $2,867.5/mt, then rebounded from the low, almost recovering the previous losses. At the end of the session, LME zinc slightly declined, closing down at $2,933/mt, a decrease of $37.5/mt or 1.26%. Trading volume increased to 14,232 lots, and open interest rose by 3,067 lots to 250,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 60-day moving average forming resistance. LME zinc inventory decreased by 1,225 mt to 242,000 mt, a drop of 0.5%. The US dollar index rose first and then fell. During the night session, the resistance on zinc prices weakened, coupled with tight ore supply still supporting zinc prices, leading to a rebound in LME zinc.

Overnight, the most-traded SHFE zinc 2412 contract opened at 24,540 yuan/mt, initially dipping to 24,535 yuan/mt, then fluctuated upward to a high of 24,750 yuan/mt. Subsequently, SHFE zinc fell back from highs to near the daily moving average, maintaining a fluctuating trend, and finally closed up at 24,640 yuan/mt, an increase of 175 yuan/mt or 0.72%. Trading volume decreased to 86,800 lots, and open interest decreased by 1,261 lots to 102,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the lower Bollinger Band providing support. On the fundamentals side, the weak supply and demand pattern remained unchanged, with domestic smelters maintaining low production. Coupled with the influence of overseas market trends, SHFE zinc slightly rebounded in the night session.

Tin

Yesterday, SHFE tin fell to 240,000 yuan/mt. The spot market continued its hot trading trend. [SMM Tin Morning News Nov 15]

Yesterday, the spot tin market continued its hot trading trend, with trading companies slightly raising their quotations, and overall fluctuations were small. The price range of domestic tin ingots of various brands remained relatively fixed. Small brand tin ingots and imported tin ingots had a slight discount against the SMM 1# tin ingot price, while delivery brand prices and Yunnan Tin brand tin ingots had a slight premium against the SMM 1# tin ingot price. In yesterday's market, SHFE tin prices continued to decline. Most downstream companies had completed restocking, leading to weaker purchasing demand later in the day. For trading companies, most had a trading volume of around 30 mt, with a few reaching 2-3 truckloads. The inventory of most trading companies had decreased to a relatively low level. Overall, the market continued its hot trading trend.

Nickel

On November 14, Jinchuan nickel was quoted at a premium of 1,900-2,200 yuan/mt, with an average of 2,050 yuan/mt, up 150 yuan compared to the previous trading day. Norilsk nickel was quoted at a discount of 350-0 yuan/mt, with an average of 175 yuan/mt, up 75 yuan compared to the previous trading day. On the morning of November 14, the futures market fluctuated upward, and the spot market premium increased compared to the previous working day. Nickel briquette prices were 124,250-124,550 yuan/mt (out of stock), down 1,450 yuan/mt compared to the previous trading day. The price spread between nickel sulphate and nickel briquette was about 2,014 yuan/mt (nickel sulphate prices were 2,014 yuan/mt lower than nickel briquette prices).