SMM Evening Comments (Nov 2): Shanghai Nonferrous Metals Closed with Gains amid Easing Market Sentiment

SHANGHAI, Nov 2 (SMM) – Shanghai nonferrous metals closed with gains with easing macro sentiment with China October Caixin manufacturing PMI record a slightly higher-than-expected reading at 49.2.

Shanghai copper added 1.37%, aluminium gained 0.79%, lead advanced 0.1%, zinc jumped 2.37%, tin rose 1.44%, and nickel climbed 4.01%.

Copper: The most-traded SHFE 2212 copper closed up 1.37% or 860 yuan/mt at 63,570 yuan/mt, with open interest up 1,629 lots to 191,357 lots.

On the macro front: (1) China October Caixin Manufacturing PMI came in at 49.2, with a previous value of 48.1 and a forecast of 49; (bullish ☆) (2) The final value of US October Markit manufacturing PMI was 50.4, against a previous reading of 49.9 and a forecast of 49.9. (bearish ☆)

In the spot market, spot premiums dropped after opening high, and then regained some of the losses amid high SHFE 2211 and 2212 spread. Spot supply was still tight, and the premiums were capped at around 140 yuan/mt amid pressure from futures contract and SHFE 2211 and 2212 spread.

Aluminium: The most-traded SHFE 2212 aluminium closed up 0.79% or 140 yuan/mt at 17,860 yuan/mt, with open interest down 2,380 lots to 174,031 lots.

From the supply side, due to factors such as the advent of the heating season and the poor profitability caused by low aluminium prices, some aluminium smelters in Henan province plan to reduce production, involving an annual production capacity of about 110,000 mt. In addition, the release of new capacity and resumption of idled capacity are slow, thus the supply pressure has somewhat eased. The domestic demand continued to be weak amid the pandemic. Aluminium ingot social inventory dropped due to fewer arrivals. It is expected that SHFE aluminium will remain rangebound in the short term.

Lead: The most-traded SHFE 2212 lead closed up 0.1% or 15 yuan/mt at 15,155 yuan/mt, with open interest down 955 lots to 57,810 lots.

On the fundamentals, the transactions in the spot market did not improve though lead price fell slightly. And both buyers and sellers were strongly wait-and-see. Though the downstream consumption is expected to be modest in November, the export market may carry opportunities after SHFE/LME price ratio dropped significantly this week.

Zinc: The most-traded SHFE 2212 zinc closed up 2.37% or 530 yuan/mt at 22,915 yuan/mt, with open interest down 6,488 lots to 111,466 lots.

The bearish sentiment eased today, and the shorts left the market after the price hit low. SHFE zinc rebounded but failed to re-gain the previous losses. And relatively poor consumption was unable to inject upside momentum into SHFE zinc.

Tin: The most-traded SHFE 2212 tin closed up 1.44% or 2,270 yuan/mt at 159,600 yuan/mt, with open interest down 2,206 lots to 40,544 lots.

In the spot market, the quotes offered by the smelters rose slightly in early trade, and some were still firm to their prices. The traders were cautious in making quotes in the morning, and the spot premiums fell slightly amid rising SHFE tin. The spot market was relatively quiet, and downstream players were contained by high prices.

Nickel: The most-traded SHFE 2212 nickel closed up 4.01% or 7,410 yuan/mt at 192,220 yuan/mt, with open interest down 4,430 lots to 81,922 lots.

In the spot market, Jinchuan nickel was in premiums of 5,000-5,800 yuan/mt, with an average of 5,400 yuan/mt, down 2,850 yuan/mt from a day ago. NORNICKEL was in premiums of 3,300-4,000 yuan/mt, with an average of 3,650 yuan/mt, down 600 yuan/mt on a daily basis. SHFE nickel was high in morning trade, and the spot prices still rose despite falling premiums today. For nickel briquette, the prices stood between 194,000-195,000 yuan/mt, up 3,400 yuan/mt from a day ago.

[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.]