SMM Morning Comment For SHFE Base Metals (Nov 20)

SHANGHAI, Nov 20 (SMM) –

Copper

US Dollar Index Continues to Weaken, Copper Prices Expected to Find Support [SMM Copper Morning Comment]

LME copper opened at $9,047/mt overnight, initially dipping to $9,022.5/mt before fluctuating upward to a high of $9,123.5/mt at the close, finally settling at $9,117/mt with an open interest of 273,000 lots. The most-traded SHFE copper 2501 contract opened at 73,980 yuan/mt, initially dipping to 73,930 yuan/mt before fluctuating upward to a high of 74,320 yuan/mt at the close, finally settling at 74,280 yuan/mt, up 0.32%, with a trading volume of 20,000 lots and an open interest of 134,000 lots. Macro side, US Fed official Schmid stated that a larger fiscal deficit would not trigger inflation as the Fed would take preventive measures, although this might mean higher interest rates. Meanwhile, the Bank of Japan might defend a rate hike in its policy review next month. The US dollar index continued to weaken, which is favorable for copper prices. Fundamentally, copper prices rose, but downstream purchasing sentiment was weaker than the previous day. Overall supply and demand remained in a weak balance, and there was a significant inflow of non-registered imported cargo recently, leading to an expected slight decline in spot premiums. In summary, with the US dollar index weakening and stable consumption, copper prices are expected to find some support today.

Aluminum

Market Sentiment Improves, SHFE Aluminum Rises Overnight [SMM Aluminum Morning Briefing Nov 20]

Overnight, the most-traded SHFE aluminum 2501 contract opened at 20,540 yuan/mt, reached a high of 20,670 yuan/mt, a low of 20,520 yuan/mt, and closed at 20,650 yuan/mt, up 65 yuan/mt or 0.32% from the previous close. On Tuesday, LME aluminum opened at $2,609.5/mt, hit a high of $2,655/mt, a low of $2,606/mt, and closed at $2,645.5/mt, up $35/mt or 1.34%. Summary: On the macro front, the market currently sees a 59.1% probability of the US Fed cutting interest rates by 25 basis points at its December meeting, down from 76.8% a month ago. Domestically, the National Development and Reform Commission stated at a press conference on the 19th that it will propose new policies to further increase support and expand the scope of support, with greater efforts to encourage private enterprises to participate in national major project construction. On the fundamentals side, domestic aluminum production remains stable, alumina prices continue to rise, and cost side pressure persists. On the demand side, shipments from Xinjiang show signs of improvement, and concentrated arrivals are expected in Gongyi and Wuxi regions in the short term, with an inventory inflection point possibly appearing as early as next week. Additionally, attention should be paid to the "rush to export" by downstream sectors before the official implementation of the aluminum semis export tax rebate cancellation and whether the aluminum price correction will continue to drive spot cargo outflows from warehouses. Overall, domestic aluminum remains in a state of low inventory and high costs. The market is gradually digesting the impact of the aluminum semis export tax rebate cancellation, with market sentiment slightly easing. In the short term, aluminum prices are expected to remain in a state of fluctuation and consolidation.

Lead

Overnight Lead Prices Slightly Rebounded, Strong Bottom Support for Lead Prices [SMM Lead Morning Comment]

Overnight, LME lead opened at $1,992.5/mt, consolidated during the Asian session, dipped to $1,975.5/mt in the European session, then rose to a high of $2,013.5/mt before slightly dropping back, and finally closed at $2,004.5/mt, up $6/mt, an increase of 0.3%.

Overnight, the most-traded SHFE lead 2412 contract opened at 16,785 yuan/mt, initially rose to a high of 16,880 yuan/mt, then slightly weakened, dipped below the daily moving average to 16,770 yuan/mt, and finally slightly rebounded to close at 16,810 yuan/mt, up 30 yuan/mt, an increase of 0.18%.

Macro side, the US dollar index fell back from highs this week. Base metals generally rebounded, with LME lead ending its consecutive decline and moving upward.

Fundamentally, primary lead smelters maintained stable production in November. However, smog warnings reappeared in regions like Henan and Anhui, but smelters have not yet announced any production changes. Environmental protection measures in autumn and winter continue to disrupt refined lead supply. Before the start of new long-term contracts, market circulation remains tight. Primary lead smelters mainly shipped with premiums, while secondary refined lead producers stood firm on quotes with discounts of 0-50 yuan/mt or slight premiums of 0-20 yuan/mt against SMM 1# lead. Downstream battery enterprises showed slight differences in consumption, but maintained high operating rates in late November. The actual impact on supply needs further attention. Lead prices have strong bottom support and are expected to fluctuate upward this week.

Zinc

Fundamentals Still Supportive, Zinc Prices Maintain Fluctuating Trend [SMM Zinc Morning Comment Nov 20]

Overnight, US Fed's Schmid stated that a larger fiscal deficit would not trigger inflation; Norway's largest oil field resumed production; Ukrainian forces used the US Army Tactical Missile System for the first time to strike Russian territory; Putin signed a decree allowing broader use of nuclear weapons; Xi Jinping met with Scholz; Wu Qing: We welcome both long-term and short-term investments; CSRC: Cracking down on financial fraud, fines and confiscations amounted to 11 billion yuan in the first 10 months of this year; large broad-based stock ETFs reduced fees.

Overnight, LME zinc opened at $2,956/mt. After a brief dip at the beginning of the session, LME zinc consolidated around the daily moving average. Near the European trading hours, shorts reduced positions and exited, causing LME zinc to surge quickly, reaching a high of $2,987/mt. Subsequently, shorts targeted LME zinc at high levels, causing it to fluctuate downward, hitting a low of $2,941.5/mt during the night session. By the end of the session, it returned to consolidate around the daily moving average, closing up at $2,966/mt, an increase of $3/mt or 0.1%. Trading volume decreased to 8,960 lots, and open interest decreased by 627 lots to 245,000 lots. Overnight, LME zinc recorded three consecutive gains, with the MACD bearish column narrowing. LME inventory increased by 1,450 mt to 260,950 mt, an increase of 0.56%, recording an inventory rise. The weak performance of the US dollar overnight provided support for non-ferrous metals. Additionally, the market awaited key signals from the US Fed's interest rate policy, leading to relatively cautious capital movements, and LME zinc maintained a fluctuating trend.

Overnight, the most-traded SHFE zinc 2412 contract opened at 24,150 yuan/mt. At the beginning of the session, bulls increased positions, causing SHFE zinc to fluctuate upward, with the center of gravity shifting to 24,870 yuan/mt, peaking at 24,915 yuan/mt. It eventually closed up at 24,860 yuan/mt, an increase of 165 yuan/mt or 0.67%. Trading volume decreased to 49,733 lots, and open interest decreased by 1,526 lots to 95,220 lots. Overnight, the most-traded SHFE zinc 2412 contract opened at 24,150 yuan/mt. At the beginning of the session, bulls increased positions, causing SHFE zinc to fluctuate upward, with the center of gravity shifting to 24,870 yuan/mt, peaking at 24,915 yuan/mt. It eventually closed up at 24,860 yuan/mt, an increase of 165 yuan/mt or 0.67%. Trading volume decreased to 49,733 lots, and open interest decreased by 1,526 lots to 95,220 lots. Overnight, the most-traded SHFE zinc 2412 contract recorded a bullish candlestick, with the 40-day moving average providing support below. On the fundamentals side, consumption slightly improved, and spot premiums remained high, providing some support for zinc prices. Attention should be paid to macro sentiment disturbances.

Tin

SHFE Tin Fluctuates at Low Levels in Night Session, Spot Market Expected to Continue Cooling Down [SMM Tin Morning Brief Nov 20]

SMM, 20, 2024: Yesterday, the spot tin market saw a cooling in trading activity, with quotes from trading companies remaining stable and showing no significant fluctuations. The price range of tin ingots from various domestic brands remained 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, tin prices fluctuated rangebound, running at low levels during the night session, and trading activity in the spot market slightly cooled down. Most downstream companies have completed their restocking plans and showed low purchasing enthusiasm. On the trading companies' side, most companies had trading volumes of 10-20 mt, with a few companies reaching trading volumes of around two truckloads. Overall, the market's trading atmosphere slightly cooled down. In summary, as tin prices rise in the future, the spot market trading is expected to continue cooling down in the short term, with most downstream companies' short-term demand being basically met.

Nickel

On November 19, Jinchuan nickel was quoted at a premium of 2,200-2,500 yuan/mt, with an average of 2,350 yuan/mt, remaining unchanged from the previous trading day. Norilsk nickel was quoted at a discount of 150 yuan/mt to a premium of 100 yuan/mt, with an average discount of 25 yuan/mt, up 25 yuan/mt from the previous trading day. On the morning of November 19, the futures market fluctuated, and there was no significant change in spot market premiums compared to the previous working day. Nickel briquette prices were 124,300-124,650 yuan/mt (out of stock), up 1,375 yuan/mt from the previous trading day. The price spread between nickel sulphate and nickel briquette was approximately 3,566 yuan/mt (nickel sulphate prices were 3,566 yuan/mt lower than nickel briquette prices).