SMM Evening Comments (Oct 25): Shanghai Nonferrous Metals Closed Mixed amid Easting Rate Hike Expectations

SHANGHAI, Oct 25 (SMM) – Shanghai nonferrous metals closed mixed today as the market expectations toward the US rate hike eased slightly following the recent rhetoric.

Shanghai copper added 0.49%, aluminium fell 0.35%, lead slid 0.03%, zinc rose 0.5%, tin jumped 0.88%, and nickel gained 1.81%.

Copper: The most-traded SHFE 2212 copper closed up 0.49% or 310 yuan/mt at 63,060 yuan/mt, with open interest up 8,708 lots to 180,053 lots.

In the spot market, the sellers mainly offered cargoes with front-month invoice, with few sources with next-month invoice, and the spread between the two stood at around 30-50 yuan/mt. The premiums of standard-quality copper with front-month invoice were mainly 480-550 yuan/mt, and then fell to 420-440 yuan/mt as the transactions were poor. Some sources were quoted below 400 yuan/mt, which finally attracted some buyers.

Aluminium: The most-traded SHFE 2211 aluminium closed down 0.35% or 65 yuan/mt to 18,530 yuan/mt, with open interest down 10,344 lots to 114,961 lots.

At present, the overall fundamentals changed little, and the inventory of aluminium ingots remained low. The spot transactions in south China were relatively active, but that in east China were weak. On the macro level, concerns about the global economic recession are getting stronger, which may cool down the expectations of sharp interest rate hikes by Fed. In the absence of other unexpected events, aluminium prices will remain volatile.

Lead: The most-traded SHFE 2211 lead closed down 0.03% or 5 yuan/mt at 15,310 yuan/mt, with open interest down 15,048 lots to 31,184 lots.

In the spot market, the discounts offered by the smelters changed little, but the purchasing interest was lacklustre as the supply and primary lead and secondary crude lead recovered. The support around 15,300 yuan/mt is worth attention.

Zinc: The most-traded SHFE 2212 zinc closed up 0.5% or 120 yuan/mt at 24,270 yuan/mt, with open interest up 6,765 lots to 92,989 lots.

The most-traded SHFE lead contract changed from 2211 to 2212 today. With longs pouring into SHFE 2212 contract, the spread between SHFE 2211 and 2212 narrowed to around 300 yuan/mt, underpinning zinc price, while the spot premiums fell constantly. SHFE zinc is expected to remain rangebound without significant contradictions in the market.

Tin: The most-traded SHFE 2212 tin closed up 0.88% or 1,450 yuan/mt at 165,800 yuan/mt, with open interest down 7,231 lots to 41,007 lots.

In the spot market, the smelters were less firm to their prices in early trade, and some palpably lowered the quotes to promote the sales. The premiums offered by the traders dropped as a whole, and the traders’ playfield was squeezed by the smelters who offered even lower prices. The downstream players still purchased on rigid demand.

Nickel: The most-traded SHFE 2211 nickel closed up 1.81% or 3,370 yuan/mt at 189,160 yuan/mt, with open interest down 6,894 lots to 50,528 lots.

In the spot market, Jinchuan nickel was in premiums of 8,000-8,500 yuan/mt, with an average of 8,250 yuan/mt, flat from a day ago. NORNICKEL nickel was in premiums of 2,800-3,000 yuan/mt, down 250 yuan/mt on a daily basis. The spot premiums of pure nickel kept falling. But the premiums of Jinchuan nickel were relatively resilient amid tight supply throughout October and severe pandemic situation. For nickel briquette, the prices stood between 189,500-190,500 yuan/mt, up 50 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.]