SMM Evening Comments (Oct 9): Shanghai nonferrous metals closed mostly higher, lead fell 2.48%

SHANGHAI, Oct 9 (SMM)  – SHFE nonferrous metals rose for the most part on Friday October 9 as U.S. President Donald Trump revived hopes of a stimulus deal on Thursday, telling Fox News that talks between the White House and Congress were back underway.

The Federal Reserve and U.S. lawmakers have spent trillions of dollars on different measure to keep the economy afloat during the coronavirus pandemic. Earlier this year, the Fed launched an open-ended bond-buying program and Trump signed a $2.2 trillion package that included enhanced unemployment benefits and direct payments to Americans. However, economic experts — as well as the Fed — have urged the government to push through more aid as it would sustain the recent economic recovery.

Nickel, the best performer, rose 2.45%, aluminium advanced 1.55%, copper went up 0.98% and tin gained 2.09%, while zinc edged down 0.23% and lead dropped 2.48%.

The ferrous complex also traded higher. Iron ore surged 4.8%, rebar rose 1.25%, and hot-rolled coil climbed 2.25%.

Copper: The most-traded SHFE 2011 copper contract slid to an intraday low of 51,260 yuan/mt in the afternoon trading, before finishing the day 0.98% higher at 51,440 yuan/mt. US President Trump said on Thursday that talks on fiscal stimulus measures between the White House and Congress were back underway, and there is an opportunity to reach an agreement, investors' risk appetite has returned, and another dispute has arisen in Chile's copper mine. Strikes continue to affect the supply side, providing momentum for the rise of copper prices. As the date of delivery approaches, long positions will continue to move backward and spread to 2011 and 2012 contracts, and long positions is still likely to rise in the next month as investors decreased their short positions.

Aluminium: The most-liquid SHFE 2011 aluminium contract finished the day 1.55% higher at 14,420 yuan/mt. Open interest rose 5,489 lots to 106,602 lots. SMM data showed that stocks of 6063 aluminium billet across the five major consumption areas – Foshan, Wuxi, Huzhou, Changzhou and Nanchang – in China expanded 42,000 mt from pre-holiday levels to 105,700 mt as of October 9.

Zinc: The most-active SHFE 2011 zinc contract bounced from an intraday low of 19,090 yuan/mt to a session high of 19,400 yuan/mt, before finishing the day 0.23% lower at 19,265 yuan/mt. Open interest rose 787 lots to 84,089 lots. The increase in social inventories is within the expected range post-holiday. Its LME counterpart increased slightly and the contract is expected to fluctuate rangebound tonight if there is no significant negative release on the macroeconomic front.

Nickel: The most-traded SHFE 2012 nickel contract closed up 2.45% at 115,940 yuan/mt today. Open interest fell 131 lots to 97,609 lots. SMM data showed that the purchasing manager's index (PMI) for downstream nickel industries, including stainless steel, electroplating, alloy and battery, stood at 50.62 in September, down 2.62 points from August. A reading above 50 indicates expansion.

Lead: The most-traded SHFE 2011 lead contract fell to an intraday low of 14,680 yuan/mt this afternoon, and finished the day 2.48% lower at 14,720 yuan/mt. Open interest rose 2,189 lots to 21,530 lots. Whether the contract could move above 14,700 yuan/mt will be watched tonight.

Tin: The most-liquid SHFE 2012 tin contract rose to an intraday high of 149,000 yuan/mt and ended 2.09% higher at 147,290 yuan/mt today. Open interest rose 1,347 lots to 25,000 lots. Pressure above is expected to around the Bollinger upper band of 148,500 yuan/mt.