SMM Evening Comments (Oct 23): Shanghai nonferrous metals declined for the most part, zinc advanced 0.38%

SHANGHAI, Oct 23 (SMM) – SHFE nonferrous metals broadly fell on Friday October 23 as investors monitored global coronavirus developments and searched for direction.

European stocks look set to track tentative gains on Wall Street after House Speaker Nancy Pelosi indicated that she and Treasury Secretary Steven Mnuchin were “just about there” in discussions over a new coronavirus aid bill. However, Pelosi cooled anticipation of legislation being in place prior to the Nov. 3 election, suggesting it could be “a while” for the bill to be written and signed.

Shanghai nonferrous metals, except for zinc, traded lower on Friday October 23. Copper dropped 0.93% to lead the losses, lead weakened 0.24%, nickel shed 0.43%, tin declined 0.72%, and aluminium fell 0.24%, while zinc advanced 0.38%.

SMM data showed that inventories of hot-rolled coils (HRC) and plates across social warehouses and steelmakers, which are used in automobiles and home appliances, decreased 3.96% in the week ended October 23 to 3.98 million mt. The stocks were 29.3% higher than the same period last year.

According to SMM data, rebar inventories across social warehouses stood at 6.9 million mt as of October 22. This was down 6% from a week ago, but up 73.6% from a year earlier.

The ferrous complex also traded lower. Hot-rolled coil fell 0.66%, rebar shed 1.01% and iron ore went down 3.14%.

Copper: The most-traded SHFE 2012 copper contract finished the day 0.93% higher at 51,950 yuan/mt. Recently, domestic copper have been greatly affected by LME copper, and there has been no major shock in domestic news recently. In addition, consumption is still weak, which dampens the rise of copper prices to a certain extent. The European epidemic continues to affect macro mood, with more than 40,000 new cases in France in a single day, and the authorities will expand the scope of curfew. The seven-day average death toll in the US hit the highest in a month, and there are as many as 90,000 new infections in England every day. The US dollar index rebounded, which caused LME copper to fall below $6,900/mt, dragging down SHFE copper. Germany, Eurozone and US preliminary Markit manufacturing Purchasing Managers’ Indexes (PMI) for October and whether the contract could gain enough support will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2011 aluminium contract fluctuated around 14,700-14,740 yuan/mt in afternoon trading and closed down 0.24% at 14,725 yuan/mt. Open interest fell 3,102 lots to 117,000 lots. It failed to break through the high level of August 21, and the price rising range was limited due to low inventory and high spot premium. The contract is likely to continue to be robust in the near term.

Zinc: The most-active SHFE 2012 zinc contract finished the day 0.38% higher at 19,785 yuan/mt. Open interest rose 5,016 lots to 75,850 lots. The contract is expected to trade at high tonight.

Nickel: The most-traded SHFE 2012 nickel contract closed down 0.43% at 119,840 yuan/mt today. Open interest fell 8,495 lots to 117,770 lots. Inventories of refined nickel in the Shanghai bonded areas decreased slightly by 500 mt from last Friday October 16 to 23,300 mt as of October 23, showed SMM data.

Lead: The most-traded SHFE 2012 lead contract ended the day 0.24% lower at 14,380 yuan/mt. Open interest rose 1,108 lots to 26,794 lots. Fundamental consumption is weak, and the upward momentum of SHFE lead is insufficient. It is expected that the contract will keep fluctuating in the near term. Whether the contract could remain above 14,350 yuan/mt will come under scrutiny tonight.

Tin: The most-liquid SHFE 2012 tin contract rose to an intraday high of 146,450 yuan/mt and ended the day 0.72% lower at 146,110 yuan/mt today. Open interest fell 5,523 lots to 16,940 lots. The contract is expected to keep fluctuating in the near term. Pressure below is expected to around 144,500 yuan/mt. Pressure above is expected to around 148,500 yuan/mt.