SMM Evening Comments (Oct 21): Shanghai Nonferrous Metals Closed Mixed on Easing Market Sentiment

SHANGHAI, Oct 21 (SMM) – Shanghai nonferrous metals closed mixed on easing market sentiment with the absence of new strong bulls or bears recently.

Shanghai copper added 1.05%, aluminium rose 0.68%, lead gained 0.78%, zinc lost 1.87%, tin fell 2.67%, and nickel dropped 2.65%.

Copper: The most-traded SHFE 2211 copper closed up 1.05% or 650 yuan/mt at 62,820 yuan/mt, with open interest down 4,547 lots to 132,547 lots.

On the macro front, 1) US October Philadelphia Fed manufacturing index came in at -8.7, against a previous value of -9.9 and a forecast of -5. (Bullish) 2) US initial jobless claims in the week of October 15 stood at 214,000, against a previous value of 226,000 and a forecast of 230,000. (Bearish)

In the spot market, spot premiums were high amid rising SHFE copper and wide SHFE 2211 and 2212 spread. The sources available in the market were tight with the congestion over ownership transferring. The cargo holders with stocks or warrants on hand held the prices firm. The spot premiums will be contained by the expected inflow of delivered sources to the market next week.

Aluminium: The most-traded SHFE 2211 aluminium closed up 0.68% or 125 yuan/mt to 18,535 yuan/mt, with open interest down 648 lots to 128,105 lots.

Supply concerns extended with continuing power supply shortage in Yunnan though the overall supply has been picking up. On the demand side, downstream production in Henna was restricted by pandemic outbreak. Domestic aluminium social inventory was low with centralised downstream restocking and reduced transport efficiency in places like Gongyi. Tight spot supply boosted spot premiums. Aluminium prices are likely to gain support from low inventory and high cost amid falling supply and demand in the short term.

Lead: The most-traded SHFE 2211 lead closed up 0.78% or 120 yuan/mt at 15,460 yuan/mt, with open interest up 2,945 lots to 57,608 lots.

In the spot market, the smelters retained their interest in making quotes, which were basically flat from yesterday. The downstream players picked up cargoes properly. To sum up, the most-traded SHFE lead contract is likely to remain high in the near term.

Zinc: The most-traded SHFE 2211 zinc closed down 1.87% or 470 yuan/mt at 24,640 yuan/mt, with open interest down 8,923 lots to 112,327 lots.

SMM zing ingot across seven major markets in China added 11,300 mt to 100,000 mt WoW this Friday. Improving market circulation greatly weighed on spot premiums, and SHFE 2211-2212 zinc contract spread narrowed to 585 yuan/mt. SHFE zinc was pressured at present.

Tin: The most-traded SHFE 2212 tin closed down 2.67% or 4,510 yuan/mt at 164,100 yuan/mt, with open interest up 10,454 lots to 52,681 lots.

In the spot market, the spread among quotes offered by smelters expanded again in early trade; several smelters were still firm to their prices, while most smelters showed strong willingness in lowering the prices. The spread mong quotes offered by traders narrowed slightly, and the spot premiums were firm though SHFE tin fell today. The sales performance of different traders diverged. The downstream players were increasingly wait-and-see as the prices dropped quickly, but low prices still attracted some buyers.

Nickel: The most-traded SHFE 2211 nickel closed down 2.65% or 4,940 yuan/mt at 181,400 yuan/mt, with open interest down 6,608 lots to 57,736 lots.

In the spot market, Jinchuan nickel was in premiums of 8,500-8,800 yuan/mt, with an average of 8,650 yuan/mt, down 600 yuan/mt on a daily basis. NORNICKEL nickel was in premiums of 3,500-3,800 yuan/mt, down 250 yuan/mt from yesterday. Falling spot pure nickel premiums were mainly the result of arrivals of imported and domestic imported pure nickel that were delayed by pandemic outbreak earlier. For nickel briquette, the prices stood between 184,300-185,100 yuan/mt, down 4,200 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.]