SMM Evening Comments (Oct 20): Shanghai Nonferrous Metals Closed Mostly in Positive Zone with Absence of Bearish Factors

SHANGHAI, Oct 20 (SMM) – Shanghai nonferrous metals closed mostly with gains as there were no further bearish factors on the macro front disturbing the market.

Shanghai copper added 0.1%, aluminium rose 0.96%, lead gained 0.36%, zinc jumped 1.54%, tin fell 0.26%, and nickel advanced 2.75%.

Copper: The most-traded SHFE 2211 copper closed up 0.1% or 60 yuan/mt at 62,270 yuan/mt, with open interest down 7,855 lots to 137,094 lots.

On the macro front: 1) US NAHB housing market index came in at 38, against a previous value of 46 and a forecast of 43. (Bullish) 2) The monthly rate of US September industrial production stood at 0.4%, against a previous value of -0.1% and a forecast of 0.1%. (Bearish)

In the spot market, premiums of mainstream standard-quality copper opened low today and then rose, while the transactions were acceptable. The premiums firstly stood at 700-720 yuan/mt in early trade with concerns over the outflows of warrants as well as potentially rising SHFE front-month and next-month spread, and the transactions were active. The premiums rose to 750 yuan/mt afterwards. But it is worth noting that the transfer of ownership was congested today, hence the cargoes available in the spot market dropped slightly today, shoring up the premiums.

Aluminium: The most-traded SHFE 2211 aluminium closed up 0.96% or 175 yuan/mt to 18,460 yuan/mt, with open interest down 7,522 lots to 128,753 lots.

The fundamentals changed little today, featuring easing supply pressure in China and high manufacturing cost overseas on high energy prices. The consumption side was still lacklustre on pandemic outbreak. SMM aluminium ingot social inventory stood at 636,000 mt today, a weekly drop of 19,000 mt, down 321,000 YoY.

Lead: The most-traded SHFE 2211 lead closed up 0.36% or 55 yuan/mt at 15,350 yuan/mt, with open interest down 847 lots to 54,663 lots.

In the spot market, some primary lead smelters resumed the production after the covid lockdown was removed. But the supply has not yet picked up. Follow-up lead ingot supply will rise with large secondary lead smelters resuming the production recently. The consumption side changed little today.

Zinc: The most-traded SHFE 2211 zinc closed up 1.54% or 380 yuan/mt at 25,100 yuan/mt, with open interest down 1,606 lots to 121,202 lots.

Non-ferrous metals prices were strong today with the absence of new bearish news disturbing the market. SHFE zinc was again subject to the fundamentals, that is, low social inventory at present.

Tin: The most-traded SHFE 2212 tin closed down 0.26% or 440 yuan/mt at 169,080 yuan/mt, with open interest up 1,839 lots to 42,227 lots.

In the spot market, some smelters were less firm to their prices in morning trade, and some lowered their offers with falling SHFE tin today. There were few quotes for the brand Yunxi from traders, and the spot premiums fell again. The actual traded prices fell along with SHFE tin.

Nickel: The most-traded SHFE 2211 nickel closed up 2.75% or 5,040 yuan/mt at 188,160 yuan/mt, with open interest up 3,548 lots to 64,344 lots.

In the spot market, Jinchuan nickel was in premiums of 9,000-9,500 yuan/mt today, with an average of 9,250 yuan/mt, down 1,000 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 3,800-4,000 yuan/mt, down 1,100 yuan/mt on a daily basis. Spot premiums fell today on rising SHFE nickel, but the spot prices rose as well. For nickel briquette, the prices stood between 188,500-189,300 yuan/mt, up 1,850 yuan/mt from a day ago.

[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.]