SMM Evening Comments (Nov 3): Shanghai Nonferrous Metals Closed Mostly with Losses as Investors Pricing in Rate Hike

SHANGHAI, Nov 3 (SMM) – Shanghai nonferrous metals closed mostly with losses as the SHFE base metals fell in morning trade on the US Fed’s rate hike decision overnight.

Shanghai copper lost 0.35%, aluminium gained 1.23%, lead lost 0.07%, zinc fell 0.15%, tin slid 2.14%, and nickel climbed 0.31%.

Copper: The most-traded SHFE 2212 copper closed down 0.35% or 220 yuan/mt at 63,350 yuan/mt, with open interest down 649 lots to 190,708 lots.

In the spot market, the premiums of standard-quality copper were offered at 180-200 yuan/mt in early trade, and the traders adjusted the premiums frequently in the day with the inflow of imported copper. The premiums fell to 150-160 yuan/mt afterwards, but the transactions were muted. The traders then lowered the premiums for some brands to 120-80 yuan/mt, which failed to attract the buyers and dragged on the premiums of mainstream standard-quality copper. The premiums stood at 130-140 yuan/mt in the second trading session, and the transactions finally picked up slightly.

Aluminium: The most-traded SHFE 2212 aluminium closed up 1.23% or 220 yuan/mt at 18,085 yuan/mt, with open interest down 7,321 lots to 166,710 lots.

On the macro front, the US Fed raised interest rates by 75 basis points in November, in line with market expectations. 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. 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 down 0.07% or 10 yuan/mt at 15,165 yuan/mt, with open interest down 3,948 lots to 53,862 lots.

SHFE non-ferrous metals contracts dropped in morning trade with US rate hike decision overnight, and SHFE lead also fell slightly. The cargo holders in the spot market were mostly less willing to sell, while the inventory held by smelters was low. SHFE lead is well supported at 15,100 yuan/mt.

Zinc: The most-traded SHFE 2212 zinc closed down 0.15% or 35 yuan/mt at 22,770 yuan/mt, with open interest up 684 lots to 112,150 lots.

Zinc ingot social inventory fell as downstream players purchased on dips earlier, which offered momentum to zinc price. However, as the momentum was not strong, SHFE zinc is likely to move rangebound in the near term.

Tin: The most-traded SHFE 2212 tin closed down 2.14% or 3,420 yuan/mt at 156,760 yuan/mt, with open interest up 2,688 lots to 43,232 lots.

In the spot market, some smelters were slightly more firm to their prices in early trade, and the smelters were relatively cautious in quoting after SHFE tin fell. The traders retained their interest in quoting, and the spot premiums rose to some extent after SHFE tin. The sales performance among traders varied. Some downstream players purchased as the prices fell.

Nickel: The most-traded SHFE 2212 nickel closed up 0.31% or 600 yuan/mt at 191,600 yuan/mt, with open interest up 734 lots to 82,656 lots.

In the spot market, Jinchuan nickel was in premiums of 5,000-5,500 yuan/mt, with an average of 5,250 yuan/mt, down 150 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 3,000-3,500 yuan/mt, with an average of 3,250 yuan/mt, down 400 yuan/mt on a daily basis. SHFE nickel was still high today, and spot prices stood high as well though the premiums fell, hence the transactions were lacklustre. For nickel briquette, the prices stood between 194,900-195,600 yuan/mt, up 750 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.]