SMM Evening Comments (Nov 7): Shanghai Nonferrous Metals Closed Mostly with Gains with Digestion of Bears

SHANGHAI, Nov 7 (SMM) – Shanghai nonferrous metals closed mostly with gains as the market sentiment picked up with the digestion of bears following recent rate hikes.

Shanghai copper gained 3.41%, aluminium added 0.44%, lead slid 0.49%, zinc advanced 2.63%, tin climbed 5.84%, and nickel lost 0.36%.

Copper: The most-traded SHFE 2212 copper closed up 3.41% or 2,170 yuan/mt at 65,730 yuan/mt, with open interest up 9,533 lots to 201,771 lots.

On the macro front: (1) US October unemployment rate came in at 3.7%, against a previous reading of 3.50% and a forecast of 3.60%. (Bullish ☆) (2) U.S. October quarterly non-farm payrolls added 261,000, against a previous print of 315,000 and a forecast of 200,000. (Bearish ☆)

In the spot market, the surge of 3.12% in SHFE 2211 kept the market participants on the sidelines. In morning trade, some cargo holders were wait-and-see and refrained from making quotes, while some frequently adjusted the premiums and even quoted in discounts in order to clinch a deal.

Aluminium: The most-traded SHFE 2212 aluminium closed up 0.44% or 80 yuan/mt at 18,275 yuan/mt, with open interest down 6,283 lots to 151,064 lots.

The macro sentiment stabilised with the digestion of US Fed rate hike. In the spot market, the arrivals of aluminium billet and ingot were reduced by restricted transportation amid spreading covid, offering some support to aluminium price. In addition, the expected high cost-induced production cuts still disturbed the market sentiment, fuelling a rally in SHFE aluminium. But the pandemic also contained downstream demand. On the whole, SHFE aluminium will remain rangebound in the near term with weak supply and demand.

Lead: The most-traded SHFE 2212 lead closed down 0.49% or 75 yuan/mt at 15,125 yuan/mt, with open interest down 3,723 lots to 49,321 lots.

In the spot market, the traders were not active in selling with the approaching delivery of SHFE 2211 and falling SHFE lead, while downstream players purchased on demand. The most-traded SHFE 2212 is expected to move rangebound in the near term.

Zinc: The most-traded SHFE 2212 zinc closed up 2.63% or 605 yuan/mt at 23,630 yuan/mt, with open interest down 3,166 lots to 103,929 lots.

SHFE zinc was supported by low inventory after the contract returned to the fundamentals, and the resistance is worth of attention.

Tin: The most-traded SHFE 2212 tin closed up 5.84% or 9,170 yuan/mt at 166,250 yuan/mt, with open interest down 5,225 lots to 37,289 lots.

In the spot market, the smelters were cautious in making quotes in early trade, and some were firm to their prices. The spot premiums offered by the traders fell palpably, and some sources quoted in absolute prices were sold at lower prices. The downstream players were increasingly wait-and-see on rebounding SHFE tin price, and some have already restocked on dips last week.

Nickel: The most-traded SHFE 2212 nickel closed down 0.36% or 690 yuan/mt at 190,410 yuan/mt, with open interest down 1,000 lots to 84,231 lots.

In the spot market, Jinchuan nickel was in premiums of 5,500-6,000 yuan/mt, with an average of 5,750 yuan/mt, flat from a day ago. NONICKEL nickel was in premiums of 3,300-3,500 yuan/mt, with an average of 3,400 yuan/mt, down 100 yuan/mt on a daily basis. The spot premiums were relatively stable, but the absolute spot prices dropped nearly 1,000 yuan/mt along with falling SHFE nickel. For nickel briquette, the prices stood at 191,500-192,500 yuan/mt, down 1,200 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.]