SMM Evening Comments (Nov 9): Shanghai Nonferrous Metals Closed with Gains on Improving Market Sentiment

SHANGHAI, Nov 9 (SMM) – Shanghai nonferrous metals closed all with gains with improving market sentiment without major disturbances from the macro front.

Shanghai copper gained 1.91%, aluminium added 1.33%, lead jumped 0.82%, zinc advanced 0.55%, tin climbed 1.93%, and nickel rose 1.55%.

Copper: The most-traded SHFE 2212 copper closed up 1.91% or 1,250 yuan/mt at 66,580 yuan/mt, with open interest up 3,793 lots to 204,380 lots.

In the spot market, SHFE 2211 and 2212 spread narrowed to less than 1,000 yuan/mt quickly in early trade, and the traders tried to extend the quotes yesterday. The discounts of mainstream standard-quality copper stood at 130-120 yuan/mt, and narrowed to 120-100 yuan/mt in morning trade. The discounts were further adjusted to 90-80 yuan/mt after the SHFE spread stabilised at around 800 yuan/mt.

Aluminium: The most-traded SHFE 2212 aluminium closed up 1.33% or 245 yuan/mt at 18,650 yuan/mt, with open interest up 9,255 lots to 164,692 lots.

On the supply side, the operating capacity in Sichuan province has been slightly restored, but is unlikely to fully recover by the end of the year due to tight hydropower supply in the dry season. The resumption of idled capacity in Guangxi province was slow, and the release of new capacity in Guizhou and Inner Mongolia fell short of expectations. On the demand side, domestic aluminium downstream consumption is still weak. Operating rates of aluminium plate/sheet, strip, foil and extrusion enterprises have started to decline due to the pandemic and insufficient orders. However, domestic aluminium inventories have repeatedly hit new lows due to limited arrivals. It is expected that SHFE aluminium will stay firm in the short term.

Lead: The most-traded SHFE 2212 lead closed up 0.82% or 125 yuan/mt at 15,290 yuan/mt, with open interest up 1,916 lots to 50,637 lots.

SHFE lead maintained upside momentum, and the traders quoted based on market dynamics in light of scarce sources available in the spot market. The downstream players purchased on demand. SHFE lead is likely to rise in the near term.

Zinc: The most-traded SHFE 2212 zinc closed up 0.55% or 130 yuan/mt at 23,850 yuan/mt, with open interest down 1,949 lots to 102,599 lots.

SHFE zinc regained the losses in the afternoon trade, and moved rangebound as a whole. US dollar index was stable intraday, and the disturbances from the macro front eased. On the whole, SHFE zinc is still pressured, with eyes on US mid-term election and US inflation data.

Tin: The most-traded SHFE 2212 tin closed up 1.93% or 3,230 yuan/mt at 170,760 yuan/mt, with open interest down 984 lots to 34,879 lots.

In the spot market, SHFE tin price was high in early trade, and the smelters and traders lowered the premiums, but the transactions were still lacklustre. SHFE warrants inventory added 112 mt to 2,053 mt, and some spot cargoes may have been delivered to warehouses holding national reserves. LME tin inventory rose 40 mt to 4,200 mt.

Nickel: The most-traded SHFE 2212 nickel closed up 1.55% or 2,940 yuan/mt at 192,980 yuan/mt, with open interest up 2,710 lots to 79,174 lots.

In the spot market, Jinchuan nickel was in premiums of 4,800-5,000 yuan/mt, with an average of 4,900 yuan/mt, down 750 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 3,000-3,300 yuan/mt, with an average of 3,150 yuan/mt, down 300 yuan/mt from the previous trading day. The spot premiums fell in morning trade, but the absolute spot prices rose along with rising SHFE nickel. The spot transactions were relatively weak. For nickel briquette, the prices stood at 195,200-195,800 yuan/mt, up 3,700 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.]