SMM Evening Comments (Oct 17): Shanghai Nonferrous Metals Closed Mostly with Losses on Macro Pressure

SHANGHAI, Oct 17 (SMM) – Shanghai nonferrous metals closed mostly with losses high US inflation data aggravated the expectations of a 75bp rate hike in November, triggering worries over economic downturn.

Shanghai copper rose 0.22%, aluminium lost 0.94%, lead was flat, zinc inched down 0.02%, tin fell 1.47%, and nickel slid 0.26%.

Copper: The most-traded SHFE 2211 copper closed up 0.22% or 140 yuan/mt at 63,080 yuan/mt, with open interest down 8,747 lots to 163,256 lots.

In the spot market, on the last trading day before the delivery of SHFE 2210, the sellers all quoted against SHFE 2211. SHFE 2210 and 2211 spread stood at 2,000 yuan/mt in morning trade, with few traders quoting. The spread then narrowed to 1,700 yuan/mt, and standard-quality copper was in premiums 1,200-1,300 yuan/mt over SHFE 2211, and good-quality copper 1,400 yuan/mt with lacklustre transactions. In the second trading session, the premiums stabilised at 1,200-1,300 yuan/mt over SHFE 2211, and the transactions picked up slightly. The premiums of standard-quality copper fell further to 1,100-1,200 yuan/mt around the closing as of noon time. On the whole, many traders stood on the sidelines on the last trading day of SHFE 2210 and wildly fluctuating SHFE 2210 and 2211 spread.

Aluminium: The most-traded SHFE 2211 aluminium closed down 0.94% or 175 yuan/mt to 18,435 yuan/mt, with open interest down 19,203 lots to 141,334 lots.

The supply and demand was relatively balanced. The aluminium ingot social inventory rose less than expected on the basis of a low base before the National Day holiday and poor arrivals after the holiday. Hence the inventory remained low. Meanwhile, high overseas energy prices kept the aluminium cost high. To sum up, aluminium prices are unlikely to break the current range amid supply disruptions in China and abroad, bearish global demand in mid and long term, as well as the wrestling between longs and shorts.

Lead: The most-traded SHFE 2211 lead closed flat at 15,310 yuan/mt, with open interest down 2,255 lots to 58,897 lots.

SHFE lead remained high with the longs leaving the market. In the spot market, the quotes from the smelters changed little, and downstream transactions were stable as well. The most-traded SHFE lead is expected to move in a narrow range in the near term.

Zinc: The most-traded SHFE 2211 zinc closed down 0.02% or 5 yuan/mt at 24,625 yuan/mt, with open interest down 7,887 lots to 116,613 lots.

Market consumption post the National Day holiday showed little improvement, and SHFE zinc lacked upside momentum. SHFE 2210 and 2211 spread once exceed 2,000 yuan/mt, and the situation after the delivery of SHFE 2210 is worth attention.

Tin: The most-traded SHFE 2212 tin closed down 1.47% or 2,520 yuan/mt at 168,700 yuan/mt, with open interest up 7,002 lots to 35,333 lots.

In the spot market, the quotes offered by the smelters posted a narrow spread, and the smelters were also less firm to their prices; some even lower the quotes amid falling SHFE tin. There were few quotes for the brand Yunxi from traders today, while the spread among other brands was small. The spot market was relatively muted. Downstream players still purchased on rigid demand, and some did not purchase as the booked imported tin arrived today.

Nickel: The most-traded SHFE 2211 nickel closed down 0.26% or 470 yuan/mt at 181,810 yuan/mt, with open interest down 5,150 lots to 61,565 lots.

In the spot market, Jinchuan nickel was in premiums of 9,800-10,500 yuan/mt today, with an average of 10,150 yuan/mt, down 100 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 4,500-4,800 yuan/mt, with an average of 4,650 yuan/mt, up 400 yuan/mt on a daily basis. Pure nickel was influenced by both bearish and bullish factors, while SHFE nickel remained rangebound. Market transactions were stable, and the premiums changed little. For nickel briquette, the prices stood between 183,300-184,300 yuan/mt, down 2,950 yuan/mt from the previous trading day.

[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.]