[SMM analysis] most of the metals have fallen sharply in the direction of the wind? Why Shanghai lead skyrocketed alone-Shanghai Metals Market

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[SMM analysis] most of the metals have fallen sharply in the direction of the wind? Why Shanghai lead skyrocketed alone

Translation 05:58:49PM Nov 01, 2018 Source:SMM

SMM11, 1 March: poor macroeconomic data, a sharp rise in the US dollar, and a meeting of the political Bureau of the CPC Central Committee said that the current downward pressure on the economy has increased, and some enterprises have more difficulties in operating. Under the influence of long-term accumulation of risks and hidden dangers, and other factors, the metal futures market has generally fallen sharply recently. Among them, Shanghai Aluminum has dropped below the platform of 14000 yuan per ton for three consecutive days, and Shanghai Copper has recorded a negative rod for 6 days in a row. Shanghai nickel also fell the biggest drop of nearly 7.5%, only lead golden rooster independent, today out of a pillar of the sky market. At the close of trading, the Shanghai lead 1812 contract rose 2.32 percent to 18740 yuan per ton.

Why does Shanghai lead outshine others?

From a fundamental point of view, the current social inventory is relatively low, the low inventory situation is difficult to reverse for a time, giving strong support to lead prices. In terms of policy, the second batch of central eco-environmental protection inspectors will be launched in an all-round way in recent days. The five inspection teams will take the "one to two" approach and will be responsible for carrying out "looking back" inspectors in 10 provinces of Shanxi, Liaoning, Jilin, Anhui, Shandong, Hubei, Hunan, Sichuan, Guizhou and Shaanxi. In addition, unexpected news, Jiyuan City launched heavy pollution weather emergency response, from today on the local refineries will face short-term production restrictions, Anhui new production capacity is not as expected. Multiple factors contributed to the surge in lead prices today.

Shanghai nickel continued to lead the decline in non-ferrous terminal consumption weakened obviously:

Shanghai nickel continued to lead the decline recently, falling more than 2 per cent as of midday today. At present, there are signs of weakness in the terminal market consumption, which will gradually lead to stainless steel base storage, pressure stainless steel prices and then compress steel mill profits. According to the calculation of the production cost of the steel plant, SMM needs to see the nickel price drop to about 95000 yuan per ton, while the third series steel plant will return to profit, and the market will shift from the stainless steel production reduction expectation to the production repair expectation. It means that the main logic point of this wave of decline will turn, so SMM believes that under the premise that the price of 3-series stainless steel stabilizes at 14000 yuan / ton, the nickel fundamental support level will be around 95000 yuan / ton. The increase in stainless steel production in the fourth quarter coincided with concerns about a decline in consumption. According to SMM statistics and analysis, even if we are optimistic that the consumption of stainless steel in the fourth quarter will maintain the level of the third quarter, against the background of the expected production of 3.93 million tons of third-series stainless steel in the fourth quarter, there will still be a substantial surplus of 300-series stainless steel in the fourth quarter. Prices will then weaken or drag down production of 3-series stainless steel in the first quarter of 2019.

Copper prices fell for three consecutive days with weak downstream consumption to maintain rigid demand procurement:

Copper prices continued to fall in the afternoon, as of 2: 00 Shanghai copper main contract 1812 fell 1.18%, the third consecutive day of trading closed down. Due to the recent macro pessimism and the strength of the US dollar, at the same time, gold nine silver ten consumption expectations have not been fulfilled, downstream terminal consumption is relatively weak copper prices recently weak. Spot transactions are weak, the market is running in the downward channel, the market is afraid of falling, and buying is cautious. Today, although some traders have entered the market to close at a low price, due to the narrowing of the price difference to 20 to 30 yuan per ton every other month, there is little room for speculation and buying and selling period. It suppresses the speculative will of traders; Downstream bearish copper prices are also in no hurry to enter the market, only to maintain rigid demand. Holders in the import window closed continuously, and just entered November, there is no intention to throw goods wantonly, so the spot market is still trapped in the short-term supply and demand stalemate saw situation, it is difficult to show a unilateral situation.

Aluminum prices break the 14000 yuan / ton mark 13500 is the psychological support level of some traders:

Today, Shanghai Aluminium 1812 increased its warehouse for the third day in a row, breaking through the 14000 yuan / ton mark and falling as low as 13860 yuan / ton. From a fundamental point of view, although the recent aluminum inventory has declined, but the extent and speed of storage has narrowed significantly. According to SMM data, domestic electrolytic aluminum stocks fell by 13000 tons on Thursday, down 13000 tons from a week earlier, compared with a drop of 45000 tons in the same period last week. At present, the marginal consumption of electrolytic aluminum is weak. According to SMM statistics, the PMI data of downstream aluminum processing enterprises such as profiles and strip and foil decreased slightly in October, and the start-up rate is less than that in September. On the supply side, the market has certain divergent views on the speed at which new production capacity will be put in place in the later period. Some of the new production capacity will continue to delay production plans, mainly because the current aluminum price compresses the profits of the industry, but at the end of the year, banks will review the progress of production of aluminum plants and make loans. Therefore, we do not rule out the possibility of accelerating the delivery of new production capacity in the future, and at the same time guard against the expansion of the production reduction scale of the high-cost aluminum plant, which has been in a state of loss for a long time. SMM believes that the main short-term Shanghai aluminum contract of 13500 yuan per ton is the psychological support level of some market traders. However, the following still need to pay attention to the consumption situation, cost changes, the pace of production reduction in aluminum plants and the short-term news stimulus brought by domestic and foreign macro news on the impact of aluminum prices.

Steel recorded the biggest decline in demand and weaker transactions in the past two weeks:

Thread prices dived in the afternoon today, with a 1901 decline in main contracts widening to 2 per cent, the biggest drop in nearly two weeks. SMM steel analysis believes that the decline in today's snail is mainly affected by weaker demand and transactions, while recent macroeconomic data have exacerbated market pessimism. The decline in inventories has narrowed (total inventories fell 4 per cent this week and 6.9 per cent last week), but absolute volumes are still there, there is still a window period at the end of the round, and price support remains at the bottom. As November approaches and downstream consumption weakens, the trading logic of the two will return.

[SMM analysis] most of the metals have fallen sharply in the direction of the wind? Why Shanghai lead skyrocketed alone

Translation 05:58:49PM Nov 01, 2018 Source:SMM

SMM11, 1 March: poor macroeconomic data, a sharp rise in the US dollar, and a meeting of the political Bureau of the CPC Central Committee said that the current downward pressure on the economy has increased, and some enterprises have more difficulties in operating. Under the influence of long-term accumulation of risks and hidden dangers, and other factors, the metal futures market has generally fallen sharply recently. Among them, Shanghai Aluminum has dropped below the platform of 14000 yuan per ton for three consecutive days, and Shanghai Copper has recorded a negative rod for 6 days in a row. Shanghai nickel also fell the biggest drop of nearly 7.5%, only lead golden rooster independent, today out of a pillar of the sky market. At the close of trading, the Shanghai lead 1812 contract rose 2.32 percent to 18740 yuan per ton.

Why does Shanghai lead outshine others?

From a fundamental point of view, the current social inventory is relatively low, the low inventory situation is difficult to reverse for a time, giving strong support to lead prices. In terms of policy, the second batch of central eco-environmental protection inspectors will be launched in an all-round way in recent days. The five inspection teams will take the "one to two" approach and will be responsible for carrying out "looking back" inspectors in 10 provinces of Shanxi, Liaoning, Jilin, Anhui, Shandong, Hubei, Hunan, Sichuan, Guizhou and Shaanxi. In addition, unexpected news, Jiyuan City launched heavy pollution weather emergency response, from today on the local refineries will face short-term production restrictions, Anhui new production capacity is not as expected. Multiple factors contributed to the surge in lead prices today.

Shanghai nickel continued to lead the decline in non-ferrous terminal consumption weakened obviously:

Shanghai nickel continued to lead the decline recently, falling more than 2 per cent as of midday today. At present, there are signs of weakness in the terminal market consumption, which will gradually lead to stainless steel base storage, pressure stainless steel prices and then compress steel mill profits. According to the calculation of the production cost of the steel plant, SMM needs to see the nickel price drop to about 95000 yuan per ton, while the third series steel plant will return to profit, and the market will shift from the stainless steel production reduction expectation to the production repair expectation. It means that the main logic point of this wave of decline will turn, so SMM believes that under the premise that the price of 3-series stainless steel stabilizes at 14000 yuan / ton, the nickel fundamental support level will be around 95000 yuan / ton. The increase in stainless steel production in the fourth quarter coincided with concerns about a decline in consumption. According to SMM statistics and analysis, even if we are optimistic that the consumption of stainless steel in the fourth quarter will maintain the level of the third quarter, against the background of the expected production of 3.93 million tons of third-series stainless steel in the fourth quarter, there will still be a substantial surplus of 300-series stainless steel in the fourth quarter. Prices will then weaken or drag down production of 3-series stainless steel in the first quarter of 2019.

Copper prices fell for three consecutive days with weak downstream consumption to maintain rigid demand procurement:

Copper prices continued to fall in the afternoon, as of 2: 00 Shanghai copper main contract 1812 fell 1.18%, the third consecutive day of trading closed down. Due to the recent macro pessimism and the strength of the US dollar, at the same time, gold nine silver ten consumption expectations have not been fulfilled, downstream terminal consumption is relatively weak copper prices recently weak. Spot transactions are weak, the market is running in the downward channel, the market is afraid of falling, and buying is cautious. Today, although some traders have entered the market to close at a low price, due to the narrowing of the price difference to 20 to 30 yuan per ton every other month, there is little room for speculation and buying and selling period. It suppresses the speculative will of traders; Downstream bearish copper prices are also in no hurry to enter the market, only to maintain rigid demand. Holders in the import window closed continuously, and just entered November, there is no intention to throw goods wantonly, so the spot market is still trapped in the short-term supply and demand stalemate saw situation, it is difficult to show a unilateral situation.

Aluminum prices break the 14000 yuan / ton mark 13500 is the psychological support level of some traders:

Today, Shanghai Aluminium 1812 increased its warehouse for the third day in a row, breaking through the 14000 yuan / ton mark and falling as low as 13860 yuan / ton. From a fundamental point of view, although the recent aluminum inventory has declined, but the extent and speed of storage has narrowed significantly. According to SMM data, domestic electrolytic aluminum stocks fell by 13000 tons on Thursday, down 13000 tons from a week earlier, compared with a drop of 45000 tons in the same period last week. At present, the marginal consumption of electrolytic aluminum is weak. According to SMM statistics, the PMI data of downstream aluminum processing enterprises such as profiles and strip and foil decreased slightly in October, and the start-up rate is less than that in September. On the supply side, the market has certain divergent views on the speed at which new production capacity will be put in place in the later period. Some of the new production capacity will continue to delay production plans, mainly because the current aluminum price compresses the profits of the industry, but at the end of the year, banks will review the progress of production of aluminum plants and make loans. Therefore, we do not rule out the possibility of accelerating the delivery of new production capacity in the future, and at the same time guard against the expansion of the production reduction scale of the high-cost aluminum plant, which has been in a state of loss for a long time. SMM believes that the main short-term Shanghai aluminum contract of 13500 yuan per ton is the psychological support level of some market traders. However, the following still need to pay attention to the consumption situation, cost changes, the pace of production reduction in aluminum plants and the short-term news stimulus brought by domestic and foreign macro news on the impact of aluminum prices.

Steel recorded the biggest decline in demand and weaker transactions in the past two weeks:

Thread prices dived in the afternoon today, with a 1901 decline in main contracts widening to 2 per cent, the biggest drop in nearly two weeks. SMM steel analysis believes that the decline in today's snail is mainly affected by weaker demand and transactions, while recent macroeconomic data have exacerbated market pessimism. The decline in inventories has narrowed (total inventories fell 4 per cent this week and 6.9 per cent last week), but absolute volumes are still there, there is still a window period at the end of the round, and price support remains at the bottom. As November approaches and downstream consumption weakens, the trading logic of the two will return.