SMM Evening Comments (Oct 14): Shanghai Nonferrous Metals Closed with Gains on Improving Risk Aversion Sentiment

SHANGHAI, Oct 14 (SMM) – Shanghai nonferrous metals closed with gains as the market sentiment improved as investors digested the higher-than-expected US inflation data. And market players are also watching on the upcoming 20^th National Congress.

Shanghai copper rose 2.02%, aluminium gained 2.36%, lead advanced 0.56%, zinc jumped 1.15%, tin climbed 1.13%, and nickel added 2.17%.

Copper: The most-traded SHFE 2211 copper closed up 2.02% or 1,260 yuan/mt at 63,700 yuan/mt, with open interest up 11,481 lots to 172,003 lots.

On the macro front, 1) US initial jobless claims in the week of October 8 stood at 228,000, against a previous value of 219,000 and a forecast of 225,000. (Bullish) 2) The unadjusted annualised US September CPI was 8.2%, against a previous print of 8.3% and a forecast of 8.1%. (Bearish)

In the spot market, SHFE 2210 and 2211 spread narrowed compared with yesterday, but hit a high of 1,640 yuan/mt in morning trade. On the last trading day before the delivery of SHFE 2210, the spot premiums were still manipulated by SHFE contract spread, and stood in the negative zone. Some traders awaited new opportunities after the delivery of SHFE 2210 with eyes on SHFE 2211 and 2212 spread, which surged to 1,200 yuan/mt today. It is almost certain that the spot premiums will return to the positive zone after delivery of SHFE 2210.

Aluminium: The most-traded SHFE 2211 aluminium closed up 2.36% or 435 yuan/mt to 18,830 yuan/mt, with open interest up 18,423 lots to 160,537 lots.

Domestic supply is not bottoming out, but the growth was limited due to power supply shortage. The demand side picked up slightly, but repeating pandemic across the country restricted the production of some downstream players. The macro front is highly uncertain at present. And aluminium prices are expected to move in a wide range.

Lead: The most-traded SHFE 2211 lead closed up 0.56% or 85 yuan/mt at 15,365 yuan/mt, with open interest up 1,172 lots to 61,152 lots.

In the spot market, the smelters retained their quoting interest, but the buyers’ demand was contained by high prices. SHFE lead is expected to fluctuate narrowly in the near term.

Zinc: The most-traded SHFE 2211 zinc closed up 1.15% or 285 yuan/mt at 24,970 yuan/mt, with open interest up 2,898 lots to 124,500 lots.

SHFE zinc was relatively strong today, and US dollar index dropped to some extent, easing the pressure on the contract. Meanwhile, zinc ingot social inventory was still low despite a weekly gain of 4,000 mt from this Monday to 88,700 mt this Friday, which offered support to zinc prices.

Tin: The most-traded SHFE 2212 tin closed up 1.13% or 1,930 yuan/mt at 172,900 yuan/mt, with open interest up 1,457 lots to 28,331 lots.

In the spot market, the smelters generally maintained their offers flat from a day ago, and a few of them lowered the quotes. The spread among quotes offered by the traders for different brands also remained stable, and the premiums fell slightly compared with yesterday. Nonetheless, rising prices suppressed the demand of downstream players, and the spot market was quiet as a whole. SHFE tin inventory added 1,132 mt to 2,754 mt this week, while LME tin inventory fell 115 mt to 1,575 mt on a weekly basis. SMM tin ingot social inventory rose 1,287 mt to 4,002 mt in the past week.

Nickel: The most-traded SHFE 2211 nickel closed up 2.17% or 3,930 yuan/mt at 185,400 yuan/mt, with open interest down 1,923 lots to 66,715 lots.

In the spot market, Jinchuan nickel was in premiums of 9,500-11,000 yuan/mt, with an average of 10,250 yuan/mt, down 750 yuan/mt from yesterday. NORNICKEL nickel was in premiums of 4,000-4,500 yuan/mt, with an average of 4,250 yuan/mt, up 100 yuan/mt on a daily basis. The September US CPI did not have a significant impact on futures market, and SHFE nickel was basically flat from yesterday in morning trade. The spot premiums also changed little with moderate market transactions. For nickel briquette, the prices stood at 186,500-187,000 yuan/mt, down 250 yuan/mt from yesterday.

[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.]