SMM Evening Comments (Oct 11): Shanghai Nonferrous Metals Closed Mostly with Gains amid Alleviated Macro Pressure

SHANGHAI, Oct 11 (SMM) – Shanghai nonferrous metals closed mostly with gains. The US dollar index recorded four winning sessions amid intensifying geopolitical tensions and expected rate hikes in the US. Market players now await the US inflation data for September to understand future rate hike path. There are no major economic readings due recently or further bearish factors on the macro front, hence non-ferrous metals rebounded with alleviated pressure.

Shanghai copper jumped 1.73%, aluminium fell 0.27%, lead advanced 0.23%, zinc gained 1.8%, tin rose 1.24%, and nickel climbed 3.09%.

Copper: The most-traded SHFE 2211 copper closed up 1.73% or 1,060 yuan/mt at 62,360 yuan/mt, with open interest up 11,886 lots to 155,384 lots.

The US dollar index recorded four winning sessions amid intensifying geopolitical tensions and expected rate hikes in the US. Market players now await the US inflation data for September to understand future rate hike path. There are no major economic readings due recently or further bearish factors on the macro front, hence non-ferrous metals rebounded with alleviated pressure.

In the spot market, the spot traders and downstream fabricators both refrained from purchasing amid surging SHFE copper as well as wide SHFE contract spread today which would raise their cost. The spot premiums fell 20-30 yuan/mt almost every minute after opening today, and the buyers found it difficult to make any decisions in this case. Meanwhile, the downstream players and traders could not accept the fact of a possible squeeze when SHFE copper stood above 64,000 yuan/mt. Now that SHFE 2210 and 2211 contract spread shows signs of expanding, the spot discounts are far from the bottom.

Aluminium: The most-traded SHFE 2211 aluminium closed down 0.27% or 50 yuan/mt to 18,465 yuan/mt, with open interest down 9,030 lots to 147,460 lots.

On the supply side, production reductions were observed in China and abroad, hence the supply dropped as a whole. Meanwhile, the consumption side recovered marginally, which will underpin aluminium prices in the near term. However, the spot market was relatively sluggish, and some downstream players were quite pessimistic. In addition, the inflow of imported aluminium ingot will weigh on the prices. Aluminium prices are expected to move in a wide range amid uncertainties on the macro front overseas.

Lead: The most-traded SHFE 2211 lead closed up 0.23% or 35 yuan/mt at 15,265 yuan/mt, with open interest up 3,918 lots to 54,903 lots.

SHFE lead rose for two days in a row. In the spot market, the quotes from the smelters changed little from a day ago, so was the trading atmosphere. SHFE lead is expected to move in a narrow range in the near term.

Zinc: The most-traded SHFE 2211 zinc closed up 1.8% or 435 yuan/mt at 24,610 yuan/mt, with open interest up 8,605 lots to 120,271 lots.

SHFE zinc remained resilient today, while SHFE and LME zinc moved toward different directions in day trading. SHFE/LME price ratio rose to 8.28, while domestic social inventory remained low, which underpinned zinc price.

Tin: The most-traded SHFE 2211 tin closed up 1.24% or 2,160 yuan/mt at 176,670 yuan/mt, with open interest up 2,144 lots to 41,356 lots.

In the spot market, the quotes offered by smelters rose along with SHFE tin, and the spread among quotes from different smelters was narrow though a few of them held the prices firm. But the premiums fell slightly. The quotes from the traders also showed narrower difference, but the downstream demand turned sluggish as they favoured imported tin with low premiums. SHFE warrants added 695 mt to 2,172 mt.

Nickel: The most-traded SHFE 2211 nickel closed up 3.09% or 5,500 yuan/mt at 183,600 yuan/mt, with open interest up 7,429 lots to 67,381 lots.

In the spot market, Jinchuan nickel was in premiums of 9,500-10,000 yuan/mt, with an average of 9,750 yuan/mt, up 500 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 4,200-4,500 yuan/mt, with an average of 4,350 yuan/mt, down 100 yuan/mt on a daily basis. The spot prices added 8,000 yuan/mt in the morning along with rising SHFE nickel, and the transactions weakened compared with yesterday. For nickel briquette, the prices stood between 187,800-188,500 yuan/mt, up 2,800 yuan/mt from a day ago with few successful transactions.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]