SMM Evening Comments (Oct 18): Shanghai Nonferrous Metals Closed Mostly with Losses

Published: Oct 18, 2022 18:00 (GMT+8)

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Shanghai nonferrous metals closed mostly with losses as the market sentiment was still not optimistic.

SHANGHAI, Oct 18 (SMM) – Shanghai nonferrous metals closed mostly with losses as the market sentiment was still not optimistic.

Shanghai copper shed 0.87%, aluminium lost 1.27%, lead inched up 0.03%, zinc dropped 0.53%, tin fell 1.48%, and nickel slid 0.87%.

Copper: The most-traded SHFE 2211 copper closed down 0.87% or 550 yuan/mt at 62,650 yuan/mt, with open interest down 11,110 lots to 152,146 lots.

The spot market was quiet on the first trading day after the delivery of SHFE 2210. The traders quoted standard-quality copper with premiums at 1,100 yuan/mt to test market response in early trade, and good-quality copper 1,200 yuan/mt, but failed to attract buyers. The premiums then fell below 1,000 yuan/mt with narrowing SHFE 2211 and 2212 spread. In the second trading session, the premiums of standard-quality copper stabilised at 820 yuan/mt, and some cargo holders quoted 780 yuan/mt in order to promote the sales.

Aluminium: The most-traded SHFE 2211 aluminium closed down 1.27% or 235 yuan/mt to 18,315 yuan/mt, with open interest down 1,082 lots to 140,252 lots.

On the supply side, domestic operating aluminium capacity rose slightly with the new capacity commissioning and existing capacity resuming the production in Sichuan and Inner Mongolia. However, the follow-up production in Yunnan is worth attention as the province will enter the dry season soon. The supply side pressure is likely to ease in the near term. Aluminium cost was supported by high energy prices in China and abroad. On the consumption side, the operating rates of aluminium fabricators were contained by the spreading pandemic. Aluminium ingot social inventory accumulated with the arrival of some ingot in transport earlier. To sum up, aluminium prices will remain rangebound with the mixture of bullish and bearish factors.

Lead: The most-traded SHFE 2211 lead closed up 0.03% or 5 yuan/mt at 15,315 yuan/mt, with open interest down 373 lots to 58,524 lots.

SHFE lead inched up today with shorts leaving the market. In the spot market, the quotes from the smelters posted few changes, and the transactions in the spot market with downstream players were modest. 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 0.53% or 130 yuan/mt at 24,530 yuan/mt, with open interest down 5,465 lots to 111,148 lots.

Intraday SHFE zinc moved rangebound. SMM refined zinc output is estimated at 516,700 mt in October, underpinning zinc prices. But with the delivery of SHFE 2210, the structural imbalance brought about by the delivery gradually faded, and the market sentiment was digested as well. SHFE zinc is likely to fall in the near term.

Tin: The most-traded SHFE 2212 tin closed down 1.48% or 2,510 yuan/mt at 166,820 yuan/mt, with open interest up 7,435 lots to 42,768 lots.

In the spot market, the quotes offered by smelters diverged greatly in early trade; some were quite firm to their prices, while some lowered the quotes with falling SHFE tin. The spot premiums offered by the traders changed little. The transactions in the spot market improved as a whole, but the specific situation differed among the traders. The downstream players stood wait-and-see on falling tin prices. SHFE warrants fell 8 mt to 2,363 mt today.

Nickel: The most-traded SHFE 2211 nickel closed down 0.87% or 1,580 yuan/mt at 180,100 yuan/mt, with open interest down 4,100 lots to 57,465 lots.

On the fundamentals, Jinchuan nickel supply tightness eased with the arrival of pure nickel. For NPI, the prices rose amid short supply. In terms of demand, spot stainless steel prices rose again with the futures contract. The alloy sector still carried rigid demand for pure nickel. To sum up, nickel prices are likely to remain rangebound with moderate demand across the industrial chain.

[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.]

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Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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