SMM Evening Comments (Oct 26): Shanghai Nonferrous Metals Closed Mixed on Mounting Economic Uncertainties

SHANGHAI, Oct 26 (SMM) – Shanghai nonferrous metals closed mixed amid mounting economic uncertainties, including weak US economic readings recently as well as strong sterling.

Shanghai copper fell 0.35%, aluminium rose 0.89%, lead slid 0.95%, zinc dropped 0.81%, tin jumped 0.3%, and nickel gained 0.54%.

Copper: The most-traded SHFE 2212 copper closed down 0.35% or 220 yuan/mt at 62,750 yuan/mt, with open interest up 4,988 lots to 185,041 lots.

On the macro front, 1) The preliminary US October Markit Manufacturing PMI came in at 49.9, with a previous value of 52 and a forecast of 51. (bullish ☆) (2) U.S. API crude oil inventories in the week of October posted an increase of 4.52 million barrels, against a previous value of falling 1.268 million barrels and a forecast of gaining 0.2 million barrels. (bearish ☆)

In the spot market, the futures price rebounded in the day, and the downstream buyers were still hesitant in purchasing. Afterwards, the cargo holders lowered the premiums to less than 200 yuan/mt, which was close to that of long-term orders, and the transactions picked up. The spread of prices in Shanghai and Guangdong is worth attention in the second half of this week. The premiums in Shanghai will stop falling if the spread keeps improving.

Aluminium: The most-traded SHFE 2211 aluminium closed up 0.89% or 165 yuan/mt to 18,685 yuan/mt, with open interest down 4,243 lots to 111,726 lots.

Aluminium supply has been stable. On the demand side, the consumption was still contained by the pandemic, and the purchases were made on rigid demand. In terms of cost, alumina prices were still on the downward track, while coal prices dropped as well. On the whole, SHFE aluminium will remain rangebound until the November US rate hike is finalised.

Lead: The most-traded SHFE 2211 lead closed down 0.95% or 145 yuan/mt at 15,190 yuan/mt, with open interest down 10,936 lots to 20,248 lots.

The discounts offered by the cargo holders narrowed slightly, and the discounts of secondary lead narrowed as well. Downstream inquiries picked up, and the buyers mostly purchased on dips. Market transactions were acceptable as a whole.

Zinc: The most-traded SHFE 2212 zinc closed down 0.81% or 195 yuan/mt at 24,005 yuan/mt, with open interest up 10,876 lots to 103,865 lots.

The monthly TCs of domestic zinc concentrate added 300 yuan/mt, while that for imported concentrate rose $35/mt, alluding sufficient supply, weighing on zinc price. Market players shall watch the support around the 60-day moving average.

Tin: The most-traded SHFE 2212 tin closed up 0.3% or 500 yuan/mt at 166,250 yuan/mt, with open interest down 3,795 lots to 37,212 lots.

In the spot market, the sellers quoted based on the moves of SHFE tin in early trade, and lifted the premiums properly. But the downstream players were strongly wait-and-see, hence the shipments were poor. SHFE warrants fell 4 mt to 1,994 mt, and LME tin inventory lost 50 mt to 4,515 mt.

Nickel: The most-traded SHFE 2211 nickel closed up 0.54% or 1,020 yuan/mt at 189,200 yuan/mt, with open interest down 6,271 lots to 44,257 lots.

On the supply side, premiums of Jinchuan nickel were underpinned by tight supply and pandemic-related transport restrictions. For overseas pure nickel, SHFE/LME price ratio fell again, bringing losses to imported pure nickel. In terms of NPI, the supply increase was limited, and the traded prices have moved above 1,400 yuan/mtu. The small and medium-sized steel mills were cautious in making inquiries. On the demand side, the spot prices of stainless steel stabilised, and the transactions were acceptable. For alloy, the rigid demand still existed, but was slightly contained by the mixture of longs and shorts. SHFE nickel is unlikely to fall significantly amid strong downstream demand and low inventory.

[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.]