SMM Evening Comments (Nov 2): Shanghai nonferrous metals closed mixed ahead of the US presidential election

SHANGHAI, Nov 2 (SMM) — SHFE nonferrous metals closed mixed on Monday November 2, with aluminium jumping 2.95%, as investors await the US presidential election due on tomorrow.

SMM data showed that social inventories of refined zinc ingots across Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Shandong and Hebei increased slightly by 100 mt from last Friday October 30 to 165,000 mt as of Monday November 2. The stocks were down 200 mt from last Monday October 26.

Manufacturing activity across nickel downstream sectors in China retreated to the contractionary territory in October. SMM data showed that the purchasing manager's index (PMI) for downstream nickel industries, including stainless steel, electroplating, alloy and battery, stood at 49.68 in October, down 0.94 point from September. A reading below 50 indicates contraction.

Copper: The most-active SHFE 2012 copper contract fell rapidly to a more than one-month low at 50,720 yuan/mt after the bell, before reversing some losses to close 0.21% weaker on the day at 51,070 yuan/mt. Uncertainties over the US presidential election and delayed fiscal stimulus bill dampened market sentiment. British Prime Minister Boris Johnson announced Saturday England is closing all nonessential businesses for the next four weeks, and more than 12 countries adopted lockdown measures to curb the spread of COVID-19. The US dollar index climbed to around 94.15, posing pressure on copper prices. Investors are now awaiting the final Euro zone manufacturing Purchasing Managers’ Index (PMI) for October which will be released tonight.

Aluminium: The most-liquid SHFE 2012 aluminium contract climbed to a more than two-year high at 14,850 yaun/mt before giving up some gains to finish the day 2.95% higher at 14,825 yuan/mt, as speculative funds flowed into the market.

Zinc: The most-traded SHFE 2012 zinc contract settled 0.66% firmer on the day at 19,755 yuan/mt, with open interest rising 2,664 lots to 94,727 lots. It is likely to continue to fluctuate range-bound in the short term as major European countries have adopted lockdown measures to curb the second wave of COVID-19, and as the US presidential election and the fiscal stimulus package remain in limbo.

Nickel: The most-liquid SHFE 2012 nickel contract fell 2.66% on the day to 115,510 yuan/mt. Although October manufacturing PMIs for China and Euro zone were better than expected, the capital market was still pervaded with risk-off sentiment, with US crude oil hitting its lowest in nearly five months.   

Lead: The most-traded SHFE 2012 lead contract finished 1.04% lower on the day at 14,315 yuan/mt. Support from secondary lead production costs and tepid consumption are likely to keep lead prices in narrow ranges in the near term. The impact of environmental protection issues on secondary lead output and the forthcoming US presidential election will be monitored. It remains to be seen whether the strength of shorts could drag the contract completely below the 10-day moving average tonight.  

Tin: The most-active SHFE 2101 tin contract finished the day 0.68% higher at 144,080 yuan/mt, and is expected to move between 141,500-145,000 yuan/mt tonight. Domestic tin smelters held prices firm, which also underpinned SHFE tin.