SMM Evening Comments (Oct 12): Shanghai Nonferrous Metals Closed Mixed on Improving Macro Sentiment

SHANGHAI, Oct 12 (SMM) – Shanghai nonferrous metals closed mixed on improving macro sentiment. China's social financing scale added 3.53 trillion yuan in September, 624.5 billion yuan more than a year earlier; RMB loans rose 2.47 trillion yuan, 810.8 billion yuan more than a year earlier.

Shanghai copper jumped 0.67%, aluminium fell 1%, lead advanced 0.23%, zinc gained 0.65%, tin lost 0.71%, and nickel slid 2.4%.

Copper: The most-traded SHFE 2211 copper closed up 0.67% or 420 yuan/mt at 62,720 yuan/mt, with open interest up 4,449 lots to 159,833 lots.

On the macro front, the IMF lowered global economic growth expectations again overnight and macro pressures extend. But China's social financing scale added 3.53 trillion yuan in September, 624.5 billion yuan more than a year earlier; RMB loans rose 2.47 trillion yuan, 810.8 billion yuan more than a year earlier. The data showed that domestic policies to stabilise growth continued to exert power, and valid demand for credit from the corporate and residential sectors continued to pick up, improving the atmosphere in the futures market.

In the spot market, copper prices dropped slightly, and the traders actively sold for cash as SHFE 2210 is about to be delivered. SHFE copper fell today, and expanding SHFE front-month and next-month spread has summoned the possibilities of short squeeze. Spot discounts are set for further declines for sure as SHFE 2210 and 2211 spread is now as high as 1,800 yuan/mt.

Aluminium: The most-traded SHFE 2211 aluminium closed down 1% or 185 yuan/mt to 18,340 yuan/mt, with open interest down 3,350 lots to 144,110 lots.

The fundamentals of aluminium changed little, which still featured contracting supply and marginally improving demand. In the spot market, the purchases post the holiday were modest, and the circulation in the market was also slow. In addition, overseas macro front still carries great uncertainties, and LME has not decided whether to ban Russian metals. The longs and bulls are still in wrestling, which will keep SHFE aluminium rangebound in a wide range.

Lead: The most-traded SHFE 2211 lead closed up 0.23% or 35 yuan/mt at 15,295 yuan/mt, with open interest up 2,749 lots to 57,652 lots.

SHFE lead hovered around 15,260 yuan/mt recently, with prices rising slowly. In the spot market, the quotes offered by the smelters were still flat, and the trading atmosphere also changed little. To sum up, the most-traded SHFE lead will still move in a narrow range in the near term.

Zinc: The most-traded SHFE 2211 zinc closed up 0.65% or 160 yuan/mt at 24,680 yuan/mt, with open interest up 1,485 lots to 121,756 lots.

Downstream consumption post the National Day holiday picked up slightly, but the forward orders remained to be seen. The operating rates and orders in the galvanising sector improved. And considering the low social inventory, SHFE zinc will remain rangebound in the near term. Market attention shall be paid to SHFE front-month and next-month spread.

Tin: The most-traded SHFE 2211 tin closed down 0.71% or 1,260 yuan/mt at 176,020 yuan/mt, with open interest down 2,557 lots to 38,799 lots.

In the spot market, the smelters retained normal interest in making quotes in early trade, and the spread among different smelters narrowed. Smelters that held firm to the prices earlier lowed their offers. The spread among quotes from the traders expanded today, and some raised the premiums in light of SHFE tin. Transactions in the spot market remained stable, and some downstream players did not purchase today.

Nickel: The most-traded SHFE 2211 nickel closed down 2.4% or 4,410 yuan/mt at 179,410 yuan/mt, with open interest down 5,462 lots to 61,919 lots.

On the supply side, domestic refined nickel output stood at 15,400 mt in September, down 0.65% MoM and up 7.67% YoY. Imported spot pure nickel suffered losses again. For NPI, short-term NPI prices are likely to move rangebound or rise slightly, mainly driven by rising production scheduling of steel mills. On the demand side, spot stainless steel prices remained stable with occasional drops in Wuxi and Foshan, while the spot premiums expanded again. Terminal orders, on the other hand, picked up slightly recently. For alloy, there still existed rigid demand for pure nickel. To sum up, the downstream demand was relatively strong recently, and nickel prices will move sideways recently.

[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.]