SMM Evening Comments (Oct 19): Shanghai nonferrous metals closed mostly higher, copper fell 0.6%

SHANGHAI, Oct 19 (SMM) – SHFE nonferrous metals rose for the most part on Monday October 19 as investors reacted to the release of China's GDP data.

China's third-quarter GDP grew 4.9% as compared to a year ago, according to data released Monday by the country's National Bureau of Statistics. That compared against expectations by Chinese economists of 5.2% GDP growth in the third quarter, according to an average of estimates compiled by Wind Information, a financial information database.

Zinc, the best performer, rose 1.1%, nickel advanced 0.73%, aluminium went up 0.85% and tin gained 0.42%, while lead edged down 0.07% and copper dropped 0.6%.

SMM data showed that social inventories of refined zinc ingots across Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Shandong and Hebei fell 3,000 mt from last Friday October 16 to 159,800 mt as of Monday October 19. The stocks were up 800 mt from last Monday October 12.

The ferrous complex closed mixed. Iron ore decreased 0.38%, rebar slipped 0.06%, while hot-rolled coil rose 0.56%.

Copper: The most-traded SHFE 2011 copper contract finished the day 0.6% lower at 51,170 yuan/mt. The second outbreak of the COVID-19 in the world has led to a continuous increase in new cases, and the confirmed infected number has reached nearly 40 million. In addition, the negotiation process of the new round of economic stimulus bill in the US is slow. Kudla, White House economic adviser, said that even if the stimulus agreement is reached before the election, it will be difficult to implement it. The Brexit negotiations have not made effective progress, and the risk aversion has continued to warm up, which has caused the US dollar to rebound and suppressed copper prices. Whether the contract could maintain its upward trend will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2011 aluminium contract climbed to an intraday high of 14,910 yuan/mt after opening and closed up 0.85% at 14,800 yuan/mt. Open interest rose 2,912 lots to 115,046 lots. Funds flowed in for the second consecutive trading day.  

Zinc: The most-active SHFE 2011 zinc contract rose finished the day 1.1% higher at 19,325 yuan/mt. Open interest fell 374 lots to 83,122 lots. Social inventory stopped increasing and decreased slightly. In addition, the contradiction of mining supply in winter has gradually become clear, and it is expected that there will be upward momentum for the contract in the following weeks.

Nickel: The most-traded SHFE 2012 nickel contract closed up 0.73% at 119,430 yuan/mt today. Open interest rose 2,009 lots to 130,175 lots. The contract is expected to trade between 116500-121500 yuan/mt this week.

Lead: The most-traded SHFE 2011 lead contract ended the day 0.07% lower at 14,420 yuan/mt. Open interest rose 35 lots to 24,378 lots. The refinery remained high prices, and rigid demand flew to secondary lead. The upward momentum of Shanghai lead is insufficient amid tepid trade of primary lead. However, considering that secondary lead is reluctant to sell, the prices of battery scraps are unlikely to drop, supporting the cost of secondary lead to some extent. It is expected that the contract will fluctuate at a low level tonight.

Tin: The most-liquid SHFE 2012 tin contract rose to an intraday high of 147,280 yuan/mt and closed down 0.42% at 146,990 yuan/mt today. Open interest fell 191 lots to 27,749 lots.