SMM Evening Comments (Oct 27): Shanghai Nonferrous Metals Closed Mixed on Easing Pressure

SHANGHAI, Oct 27 (SMM) – Shanghai nonferrous metals closed mixed with easing pressure on the macro front. Recently, some Fed officials have expressed desire to slow down the pace of interest rate hikes as soon as possible. According to the report, Fed officials may discuss whether and how to signal that a smaller rate hike is planned in December, and the market is now fully expecting the Fed to raise interest rates by 75 basis points (bps) in November and 50 bps in December. The dollar index fell as a result.

Shanghai copper gained 1.07%, aluminium lost 0.43%, lead slid 0.79%, zinc rose 0.29%, tin fell 0.76%, and nickel dropped 1.39%.

Copper: The most-traded SHFE 2212 copper closed up 1.07% or 670 yuan/mt at 63,450 yuan/mt, with open interest up 10,589 lots to 195,630 lots.

In the spot market, SHFE copper once again rose to a high of 64,530 yuan/mt, and SHFE 2211 and 2212 spread was still high, containing downstream demand. With the digestion of delivered warrants and imports as well as the delayed arrival of new imports, the spot market is likely to extend the tightness in supply. Premiums are likely to stabilise around the end of the month.

Aluminium: The most-traded SHFE 2211 aluminium closed down 0.43% or 80 yuan/mt to 18,565 yuan/mt, with open interest down 26,615 lots to 85,111 lots.

SMM aluminium ingot social inventory dropped 15,000 mt from a week ago to 621,000 mt as of this Thursday October 27. However, falling aluminium ingot social inventory failed to boost SHFE aluminium as the longs left the market. The transportation has been greatly hindered by the pandemic. And SHFE aluminium will be struggling for direction in the near term.

Lead: The most-traded SHFE 2212 lead closed down 0.79% or 120 yuan/mt at 15,125 yuan/mt, with open interest up 2,525 lots to 65,225 lots.

According to SMM research, the discounts narrowed slightly as SHFE lead has dropped for two days in a row, and the smelters had limited in-plant inventory. But the downstream players were still wait-and-see, and purchased mainly on rigid demand. The market shall pay attention to the changes of social inventory, and a possible accumulation will weigh on SHFE lead price.

Zinc: The most-traded SHFE 2212 zinc closed up 0.29% or 70 yuan/mt at 24,120 yuan/mt, with open interest up 6,816 lots to 110,681 lots.

The US Dollar index dropped below 110, easing the pressure on zinc contracts. Rebounding LME zinc offered some support to SHFE zinc. But on the whole, SHFE zinc is likely to move rangebound in the near term.

Tin: The most-traded SHFE 2212 tin closed down 0.76% or 1,260 yuan/mt at 165,520 yuan/mt, with open interest down 123 lots to 37,089 lots.

In the spot market, the quotes offered by the smelters were relatively low in early trade, and the downstream demand did not show signs of recovering. Coupled with the imminent arrivals of low-priced imported tin, the market players were quite wait-and-see. SHFE warrants added 36 mt to 2,030 mt, and LME tin inventory lost 25 mt to 4,490 mt.

Nickel: The most-traded SHFE 2211 nickel closed down 1.37% or 2,590 yuan/mt at 186,960 yuan/mt, with open interest down 12,941 lots to 31,316 lots.

In the spot market, the premiums of Jinchuan nickel stood at 6,500-6,800 yuan/mt, with an average of 6,650 yuan/mt, down 1,350 yuan/mt on a daily basis. NORNICKEL nickel was in premiums of 1,800-2,000 yuan/mt, with an average of 1,900 yuan/mt, down 500 yuan/mt from a day ago. The traders were now more active in picking up cargoes after the ex-factory prices of Jinchuan nickel fell, though it is around the end of the month. The pure nickel market was more dynamic. For nickel briquette, the prices stood between 188,600-189,200 yuan/mt, down 2,500 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.]