SMM Evening Comments (Oct 22): Shanghai nonferrous metals ended mixed

SHANGHAI, Oct 22 (SMM) – SHFE nonferrous metals closed mixed on Thursday October 22 as the International Monetary Fund on Wednesday downgraded its growth forecast for Asia-Pacific to -2.2% in 2020 — “the worst outcome for this region in living memory.”

US stimulus talks remain in focus for global markets with uncertainty over whether a deal can be reached before the Nov. 3 presidential election. However, comments on stimulus talks from House Speaker Nancy Pelosi’s deputy chief of staff, Drew Hammill, offered some room for optimism Wednesday.

Zinc, the best performer, rose 0.82%, aluminium advanced 0.03% and copper climbed 0.48%, while Nickel edged down 1.37%, lead weakened 0.28% and tin shed 1.37%.

An SMM survey showed that the average operating rate of BFs at steel mills in China edged up 0.06 percentage point from the previous week to 88.28% as of October 21.

The ferrous complex rose across the board. Iron ore increased 0.44%, rebar rose 0.28%, and hot-rolled coil climbed 1.11%.

Copper: The most-traded SHFE 2012 copper contract finished the day 0.48% higher at 52,340 yuan/mt. The US 1.88 trillion stimulus bill is expected to be reached, and the UK agreed to restart the Brexit trade negotiations with the EU. The British chief negotiator said that the two sides will start intensive negotiations in London from Thursday afternoon, resulting in the biggest increase of the British pound in nearly seven months, which led to the continuous decline of the US dollar index, reaching a one-month low of 92.4. A series of news benefited copper prices, which led LME copper to break through $7,000/mt last night. Domestic copper futures have insufficient momentum. Even if the US dollar falls all the way, terms of trade are still going down with sluggish domestic consumption. US weekly jobless claims and whether the contract could follow its counterpart will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2011 aluminium contract fell to an intraday low of 14,700 yuan/mt and closed up 0.03% at 14,725 yuan/mt. Open interest fell 1,064 lots to 120,331 lots. Change of US dollar index and the flow of funds will be monitored.

Zinc: The most-active SHFE 2012 zinc contract finished the day 0.82% higher at 19,745 yuan/mt. Open interest rose 2,970 lots to 70,834 lots. The weak spot performance has suppressed the confidence of long positions, and the upward momentum of zinc is slightly insufficient

Nickel: The most-traded SHFE 2012 nickel contract closed down 1.37% at 119,860 yuan/mt today. Open interest fell 22,000 lots to 126,000 lots. The contract is expected to continue to fluctuate around 120,000 yuan/mt tonight. US weekly jobless claims as of October 17 will come under scrutiny tonight.

Lead: The most-traded SHFE 2012 lead contract slid to a session low of 14,270 yuan/mt in afternoon trading and ended the day 0.28% lower at 14,325 yuan/mt. Open interest rose 1,463 lots to 26,794 lots. Fundamental consumption is biased towards the premium of secondary lead, which is difficult to support SHFE lead prices. Downstream prices of battery scrap is unlikely to drop, and the cost of secondary lead provides support. It is expected that the contract will keep fluctuating in the near term. Whether the contract could remain above 14,300 yuan/mt will come under scrutiny tonight.

Tin: The most-liquid SHFE 2012 tin contract rose to an intraday high of 148,360 yuan/mt and ended the day 1.37% lower at 145,640 yuan/mt today. Open interest fell 4,035 lots to 22,463 lots. Pressure below is expected to around 145,000 yuan/mt.