SMM Evening Comments (Oct 31): Shanghai Nonferrous Metals Closed with Losses on Release of Economic Readings

SHANGHAI, Oct 31 (SMM) – Shanghai nonferrous metals closed mostly with losses. On the macro front, high US inflation has weakened the expectations for mild rate hike at the upcoming US Fed meeting. Chinese PMI fell to the contraction zone, and the shorts were active with disturbances on the macro front.

Shanghai copper declined 2.22%, aluminium lost 4.23%, lead gained 0.63%, zinc shed 5.4%, tin fell 2.59%, and nickel dropped 3.27%.

Copper: The most-traded SHFE 2212 copper closed down 2.22% or 1,410 yuan/mt at 62,060 yuan/mt, with open interest down 4,259 lots to 190,869 lots.

In the spot market, spot premiums fell after opening high, which was mainly subject to the SHFE 2211 and 2212 spread. Some cargo holders quoted flat from last Friday in early trade, and the premiums of standard-quality copper with next-month invoice stood at 320-350 yuan/mt, but there were no successful transactions. The SHFE 2211 and 2212 spread surged to 1,200 yuan/mt, and the spot premiums fell quickly below 300 yuan/mt. The premiums then fell further to 230-270 yuan/mt with expanding SHFE 2211 and 2212 spread and poor market transactions, and then to 210-220 yuan/mt, with sources quickly sold out. The premiums were then raised by 20-30 yuan/mt after the spread narrowed slightly.

Aluminium: The most-traded SHFE 2212 aluminium closed down 4.23% or 775 yuan/mt to 17,535 yuan/mt, with open interest up 27,454 lots to 192,400 lots.

On the fundamentals, aluminium supply and demand were still both weak. SMM aluminium ingot social inventory stood at 613,000 mt as of today, down 8,000 mt from last Thursday, and down 8,000 mt from the end of September. The inventory level was also down 369,000 mt compared with the same period last year. However, the de-stocking process was not the result of improving demand, hence SHFE aluminium closed the day with losses.

Lead: The most-traded SHFE 2212 lead closed up 0.63% or 95 yuan/mt at 15,180 yuan/mt, with open interest down 17 lots to 62,446 lots.

LME lead surged last Friday on the news that BCOM is likely to add a new lead futures contract in 2023, and SHFE lead rose slightly today with investors digesting this piece of news. On the fundamentals, the supply and demand in the primary lead and lead-acid battery sectors was relatively balanced. Lead ingot social inventory rose slightly from last Friday as market players were generally wait-and-see. Investors shall watch the support at 15,200 yuan/mt overnight.

Zinc: The most-traded SHFE 2212 zinc closed down 5.4% or 1,290 yuan/mt at 22,610 yuan/mt, with open interest up 8,536 lots to 124,875 lots.

High inflation has weakened the expectations for mild rate hike at the upcoming US Fed meeting. Domestic PMI fell to the contraction zone, and the shorts were active with disturbances on the macro front. Coupled with poor downstream demand on lingering pandemic situation, the fundamentals were unable to underpin zinc price, which hit a record low since this August.

Tin: The most-traded SHFE 2212 tin closed down 2.59% or 4,190 yuan/mt at 157,800 yuan/mt, with open interest down 3,276 lots to 43,911 lots.

In the spot market, the quotes from the smelters fell along with SHFE tin contract, and the quotes from the traders lost its advantage. The smelters’ shipment was relatively more active than the trader’. SHFE warrants fell 32 mt to 1,990 mt today.

Nickel: The most-traded SHFE 2212 nickel closed down 3.27% or 6,050 yuan/mt at 178,900 yuan/mt, with open interest down 4,778 lots to 70,390 lots.

In the spot market, Jinchuan nickel was in premiums of 6,000-6,300 yuan/mt, with an average of 6,150 yuan/mt, down 100 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 1,200-1,500 yuan/mt, with an average of 1,350 yuan/mt, down 200 yuan/mt on a daily basis. Spot premiums fell on contracting downstream demand and the change of the most-traded SHFE contract from 2211 to 2212. For nickel briquette, the prices stood between 182,600-183,400 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.]