SMM Evening Comments (Oct 28): Shanghai Nonferrous Metals Closed with Losses with Investors Pricing in Rate Hikes

SHANGHAI, Oct 28 (SMM) – Shanghai nonferrous metals closed mostly with losses as the market sentiment was quite bearish today after the European Central Bank raised the interest rate by another 75 basis points to 1.5% overnight.

Shanghai copper declined 1.01%, aluminium lost 2.8%, lead slid 0.56%, zinc shed 2.73%, tin fell 4.39%, and nickel dropped 1.68%.

Copper: The most-traded SHFE 2212 copper closed down 1.01% or 640 yuan/mt at 62,830 yuan/mt, with open interest down 502 lots to 195,128 lots.

In the spot market, the premiums dropped after opening high. The sellers mostly quoted standard-quality copper with next-month invoice at premiums of 400-420 yuan/mt, and the premiums of good-quality copper were almost at the same level; but the transactions were poor. The premiums of standard-quality copper then fell to 370-390 yuan/mt, and the market transactions picked up slightly. In the second trading session, the market sentiment was acceptable even after SHFE copper rebounded, and the spot premiums fell to 340-370 yuan/mt, with the transactions made at 360-370 yuan/mt.

Aluminium: The most-traded SHFE 2212 aluminium closed down 2.8% or 520 yuan/mt to 18,075 yuan/mt, with open interest up 16,337 lots to 164,946 lots.

SHFE slumped today, and the traders’ were down in spirits. The engagement of shorts weighed on aluminium prices. ECB hiked the interest rate by another 75 basis points overnight to 1.5%, a bear for commodity prices. SHFE aluminium is likely to remain weak in the near term.

Lead: The most-traded SHFE 2212 lead closed down 0.56% or 85 yuan/mt at 15,080 yuan/mt, with open interest down 2,762 lots to 62,463 lots.

SHFE lead remained weak today, and the sellers were less interest in making shipment, while their offers remained firm. The downstream players purchased on demand, but some stood wait-and-see for fear of further price drops.

Zinc: The most-traded SHFE 2212 zinc closed down 2.73% or 660 yuan/mt at 23,500 yuan/mt, with open interest up 5,658 lots to 116,339 lots.

SHFE zinc created a near-term low with strong bearish sentiment in the metals market after ECB raised the interest rate by 75 basis points.

Tin: The most-traded SHFE 2212 tin closed down 4.39% or 7,300 yuan/mt at 158,930 yuan/mt, with open interest up 10,098 lots to 47,187 lots.

In the spot market, the quotes offered by the smelters changed little in early trade, and some lowered the prices afterwards on falling SHFE tin and were eager to sell. Downstream demand picked up, and the transactions were palpably better. SHFE warrants inventory fell 8 mt to 2,022 mt, and LME tin inventory dropped 40 mt to 4,450 mt.

Nickel: The most-traded SHFE 2212 nickel closed down 1.68% or 3,120 yuan/mt at 182,200 yuan/mt, with open interest up 12,753 lots to 75,168 lots.

In the spot market, Jinchuan nickel was in premiums of 6,000-6,500 yuan/mt today, with an average of 6,250 yuan/mt, down 400 yuan/mt from the previous trading day. NORNCIKEL nickel was in premiums of 1,300-1,800 yuan/mt, with an average of 1,550 yuan/mt, down 350 yuan/mt on a daily basis. The supply tightness in the spot market improved slightly, and the traders were more willing to sell approaching the end of the month. For nickel briquette, the prices stood between 185,000-186,000 yuan/mt, down 3,400 yuan/mt from yesterday.

[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.]