SMM Evening Comments (Nov 12): Shanghai Nonferrous Metals Closed Mostly with Gains amid Loosening House Loans

SHANGHAI, Nov 12 (SMM) – Shanghai nonferrous metals mostly closed with gains as the market was boosted by the new of loosening house loans.

Shanghai copper added 0.47%, aluminium gained 1.18%, lead rose 0.81%, zinc lost 0.83%, tin climbed 2.54%, and nickel jumped 0.77%.

Copper: The most-traded SHFE 2112 copper closed up 0.47% or 330 yuan/mt to 70570 yuan/mt, with open interest down 4265 lots to 144542 lots.

On the macro front, the UK GDP for Q3 stood at 6.6, lower than estimate. The economic prospect of UK after Brexit was still in a blur, and the sterling may trend down in the short term, boosting US dollar index, which touched a high of 95.27 since July, 2020. However, the market was boosted as the news came that the housing loan for second-hand property has recovered, and the approval process and loan time of housing loans for first and second homes has been accelerated and shortened.

On the fundamentals, SHFE copper inventory increase 1150 mt to 12435 mt, which has been rising but was still at a low level, hence underpinning copper prices to some extent.

Tonight, the market shall watch JOLTs job vacancies and China’s social electricity consumption.

Aluminium: The most-traded SHFE 2201 aluminium closed up 1.18% or 225 yuan/mt to 19350 yuan/mt, with open interest up 8104 lots to 165879 lots.

The coal and ferrous metals prices corrected, containing the upside momentum of SHFE aluminium.

Lead: The most-traded SHFE 2112 lead closed up 0.81% or 125 yuan/mt at 15570 yuan/mt, with open interest down 4480 lots to 49731 lots.

The supply of primary and secondary lead is expected to recover in November, potentially pressuring domestic inventory of lead ingot. But the near-term downstream orders have been moderate, while the energy shortage remained. The SHFE lead is expected to stay congested in the short term amid both bearish and bullish factors.

Zinc: The most-traded SHFE 2112 zinc closed down 0.83% or 195 yuan/mt at 23185 yuan/mt, with open interest down 4296 lots to 65078 lots.

On the macro front, the National Development and Reform Commission said that it will promote the construction of specialised transportation channels of coal, iron ore, oil, etc. While DCE announced that it will have strict sample inspections on the futures businesses and goods storage of designated deliverable warehouses.

On the fundamentals, the zinc ingot inventory across seven markets in China totalled 131,300 mt as of Friday, up 3,500 mt from Monday, indicating weak spot transactions after zinc prices rose. And the rising inventory also rendered pessimistic sentiment to the market. But the short supply sustained amid rising costs in transportation and smelting. Thus the market shall still watch the changes in inventory.

Tin: The SHFE 2112 tin closed up 2.54% or 7130 yuan/mt at 287940 yuan/mt, with open interest down 2474 lots to 39342 lots.

The near-term tin prices will still gain support from rising domestic warrants, high spot premiums and narrowing monthly spread.

Nickel: The most-traded SHFE 2112 nickel closed up 0.77% or 1110 yuan/mt to 145810 yuan/mt, with open interest up 1124 lots to 114279 lots.

The stainless sector weakened due to the impacts of ferrous products. LME nickel trended down amid pressures, and SHFE nickel followed. On the fundamentals, stainless steel prices have been moving down for some time, and the orders were sluggish, resulting in price corrections. And the demand for nickel will be at a low level.