SMM Evening Comments (Oct 19): Shanghai Nonferrous Metals Closed Mixed on Easing Macro Pressure

SHANGHAI, Oct 19 (SMM) – Shanghai nonferrous metals closed mixed with easing macro pressure as the US dollar index has been falling for recently.

Shanghai copper shed 1.13%, aluminium lost 0.11%, lead inched down 0.07%, zinc rose 1.84%, tin added 0.52%, and nickel gained 2.58%.

Copper: The most-traded SHFE 2211 copper closed down 1.13% or 710 yuan/mt at 62,120 yuan/mt, with open interest down 7,197 lots to 144,949 lots.

On the macro front: (1) US NAHB Housing Market Index came in at 38 in October, against a previous value of 46 and a forecast of 43. (Bullish ☆) (2) U.S. September industrial output grew 0.4% MoM, with a previous print of -0.1% and a forecast of 0.10%. (Bearish ☆)

The spot market was relatively quiet today, and few downstream players picked up cargoes. According to SMM understanding, some downstream players still kept some raw material stocks, and awaited the opportunity for procurement after the delivery of SHFE 2210. The sources circulating in the spot market have not yet picked up, and the premiums were still high for downstream fabricators, which stood wait-and-see. Spot premiums are likely to fall steeply tomorrow with the outflows of delivered sources.

Aluminium: The most-traded SHFE 2211 aluminium closed down 0.11% or 20 yuan/mt to 18,305 yuan/mt, with open interest down 3,978 lots to 136,274 lots.

The operating aluminium capacity kept rising with new capacities put into production and existing capacities resuming in Sichuan and Inner Mongolia, but the dry season in Yunnan is likely to drag on the process. Supply pressure will ease in the near term. Aluminium manufacturing cost remained firm, underpinning aluminium prices. Aluminium ingot social inventory accumulated as of Monday October 17 with the arrivals of ingot in transport earlier as well as contained operating rates of aluminium fabricators. Overseas, rising LME aluminium inventory and high energy prices pressured LME aluminium.

Lead: The most-traded SHFE 2211 lead closed down 0.07% or 10 yuan/mt at 15,310 yuan/mt, with open interest down 3,014 lots to 55,510 lots.

SHFE lead dropped slightly today trailing LME lead after US dollar index rose recently. In the spot market, relatively tight lead ingot supply offered some support to lead prices, but the supply shortage eased slightly after some smelters resumed the production. The consumption side changed little compared with a day ago. The most-traded SHFE lead is expected to keep moving in a narrow range in the near term.

Zinc: The most-traded SHFE 2211 zinc closed up 1.84% or 450 yuan/mt at 24,955 yuan/mt, with open interest up 11,660 lots to 122,808 lots.

SHFE zinc was relatively strong on expanding SHFE 2211 and 2212 spread as well as comparatively tight supply of spot goods.

Tin: The most-traded SHFE 2212 tin closed up 0.52% or 870 yuan/mt at 168,890 yuan/mt, with open interest down 2,380 lots to 40,388 lots.

In the spot market, the quotes from the smelters changed little in early trade, and the spread among different smelters was narrow except for some which held the prices firm; some smelters lowered their offers today. The quotes of the brand Yunxi were rarely heard today from the traders, and the premiums of other brands fell slightly. But transactions in the spot market were mostly in a small amount. Downstream players mainly purchased on rigid demand.

Nickel: The most-traded SHFE 2211 nickel closed up 2.58% or 4,630 yuan/mt at 184,310 yuan/mt, with open interest up 3,331 lots to 60,796 lots.

In the spot market, Jinchuan nickel was in premiums of 10,000-10,500 yuan/mt, an average of 10,250 yuan/mt, flat from a day ago. NORNICKEL nickel was in premiums of 5,000 yuan/mt, up 200 yuan/mt on a daily basis. Spot pure nickel supply tightened again recently, and is likely to pick up after the delivered sources under SHFE 2210 flowed into the market. The prices of nickel briquette were 186,600-187,500 yuan/mt today, up 4,900 yuan/mt from yesterday. The cost efficiency of briquette weakened further as the prices rose on higher SHFE nickel price.

[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.]