SMM Evening Comments (Oct 29): Shanghai nonferrous metals declined for the most part, lead advanced 0.56%

SHANGHAI, Oct 29 (SMM) – SHFE nonferrous metals broadly fell on Thursday October 29 as coronavirus cases continue to surge in the West.

Markets are also skittish ahead of the U.S. election on Nov. 3, soaring coronavirus cases stateside and diminishing hopes of imminent fiscal stimulus.

Shanghai nonferrous metals, except for lead and aluminium, traded lower on Thursday October 29. Zinc dropped 0.56% to lead the losses, nickel shed 0.39%, tin declined 0.32%, and copper fell 0.41%, while aluminium advanced 0.17% and lead climbed 0.56%.

An SMM survey showed that the average operating rate of BFs at steel mills in China rose 0.46 percentage point from the prior week and climbed 0.31% from the previous year to 88.7% as of October 29.

The ferrous complex rose across the board. Iron ore increased 0.71%, rebar rose 0.69%, and hot-rolled coil climbed 0.29%.

Copper: The most-traded SHFE 2012 copper contract finished the day 0.41% lower at 51,470 yuan/mt. Affected by the COVID-19 prevention and control in Europe, the macro sentiment continued to be pessimistic, with new cases in major European countries hitting record highs, France and Germany introducing severe blockade measures, and Spain, Italy, Britain and other European places recording new cases. Fauci, a top American epidemiologist, said that the COVID-19 vaccine in the US will not be available until January next year at the earliest. A series of pessimistic news caused the European market to drive the global risk assets to fall, and the US dollar as a safe haven asset rose to around 93.5. In addition, commercial crude oil inventories excluding strategic reserves increased by 4.32 million barrels to 492.4 million barrels, up 0.9%. US domestic crude oil production increased 1.2 million barrels to 11.1 million barrels per day last week. Crude oil slump dragged down copper prices slightly. News of the Fifth Plenary Session and whether the contract could remain above 51,500 yuan/mt will continue to come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2012 aluminium contract fell to a session low of 14,250 yuan/mt after opening and climbed to an intraday high of 14,480 yuan/mt in afternoon trading before finishing the day 0.17% higher at 14,440 yuan/mt. Open interest rose 10,541 lots to 102,115 lots. The contract is likely to maintain its upward trend.

Zinc: The most-active SHFE 2012 zinc contract closed up 0.56% at 19,690 yuan/mt. Open interest fell 13,709 lots to 97,729 lots. The resurgence of the European pandemic has suppressed market sentiment, and the marginal deterioration risk of terminal demand is increasing. The contradiction in zinc market still needs time to ferment. The contract is expected to keep fluctuating rangebound in the near term.

Nickel: The most-traded SHFE 2012 nickel contract ended the day 0.39% lower at 121,620 yuan/mt today. Open interest fell 28,274 lots to 110,901 lots.

Lead: The most-traded SHFE 2012 lead contract rose to an intraday high of 14,560 yuan/mt after opening as investors added their long positions and ended the day 0.56% higher at 14,455 yuan/mt. Open interest fell 589 lots to 30,713 lots. Whether the contract could move above 20-day moving average of 14,500 yuan/mt will come under scrutiny tonight.

Tin: The most-liquid SHFE 2101 tin contract climbed to a session high of 143,920 yuan/mt and finished the day 0.32% lower at 143,680 yuan/mt today. Open interest rose 92 lots to 29,112 lots. The contract is expected to keep fluctuating in the near term. Pressure below is expected to around 141,000 yuan/mt. Pressure above is expected to around 146,000 yuan/mt.