SMM Evening Comments (Nov 16): Shanghai Nonferrous Metals Closed Mostly with Gains on Easing Market Sentiment

SHANGHAI, Nov 16 (SMM) – Shanghai nonferrous metals closed mostly with gains on easing market sentiment. Specifically, boosted by supporting real estate policies in China, unexpected fall in US October PPI, as well as falling US Dollar index, the market risk appetite improved.

Shanghai copper fell 0.25%, aluminium added 0.35%, lead rose 0.41%, zinc advanced 0.37%, tin jumped 3.36%, and nickel gained 0.35%.

Copper: The most-traded SHFE 2212 copper closed down 0.25% or 170 yuan/mt at 66,710 yuan/mt, with open interest down 10,208 lots to 167,024 lots.

In the spot market, in the first trading day after the market players started to quote against SHFE 2212, most sources available in the market were warrants, hence the supply in the spot market was relatively tight. The premiums of mainstream standard-quality copper stood at 400-410 yuan/mt in early trade, which did not appeal the buyers. The premiums fell to 370-380 yuan/mt in the first trading session, and to 350-370 yuan/mt in the second session. Market transactions were made around 360 yuan/mt.

Aluminium: The most-traded SHFE 2212 aluminium closed up 0.35% or 65 yuan/mt at 18,895 yuan/mt, with open interest down 2,024 lots to 177,977 lots.

The production resumption and commissioning in Sichuan, Guangxi and Inner Mongolia was progressing smoothly, but the process was slow. Aluminium production cuts in Henan reached 80,000 mt, and remained stable in the other regions. Daily aluminium production fell slightly. The spot inventory in mainstream markets in China was low due to delayed arrivals from places like Xinjiang, but is likely to improve with the pick-up of transportation efficiency. But the inventory will remain low in the short term. On the macro front, boosted by supporting real estate policies in China, unexpected fall in US October PPI, as well as falling US Dollar index, the market risk appetite improved. SHFE aluminium is likely to move rangebound in the near term.

Lead: The most-traded SHFE 2212 lead closed up 0.41% or 65 yuan/mt at 15,880 yuan/mt, with open interest down 707 lots to 61,088 lots.

SHFE lead pulled back after hitting high, and the cargo holders quoted based on the market changes. The discounts expanded in some places, and most downstream players purchased in the form of long-term orders. Market inquiries were not active, and the transactions were muted.

Zinc: The most-traded SHFE 2212 zinc closed up 0.37% or 90 yuan/mt at 24,385 yuan/mt, with open interest down 5,965 lots to 89,292 lots.

SHFE zinc gradually returned to the fundamentals with easing macro sentiment, while low social inventory offered strong support.

Tin: The most-traded SHFE 2212 tin closed up 3.36% or 6,100 yuan/mt at 187,700 yuan/mt, with open interest down 5,408 lots to 44,426 lots.

In the spot market, the smelters raised the offers along with rising SHFE tin, and the spread among different smelters narrowed. The spot premiums offered by the traders fell, but the spread among the traders expanded. The market shipments were low, and the traders’ quotes were not necessarily more attractive than the smelters’. The downstream demand was clearly contained by high tin prices.

Nickel: The most-traded SHFE 2212 nickel closed up 0.35% or 720 yuan/mt at 206,370 yuan/mt, with open interest up 538 lots to 75,483 lots.

On the supply side, pure nickel inventory remained low amid tight supply. For NPI, the intraday traded prices fell, and NPI market remained weak on falling stainless steel prices. On the demand side, the downstream demand for stainless steel was muted, and the terminal players were not interested in picking up cargoes. With the news and fundamentals front marching towards different directions, the stainless steel price was still struggling for a direction. The traders mostly held low inventory, and the spot prices trailed the moves of futures contract. To sum up, SHFE nickel price is likely to fluctuate wildly with weak supply and demand.

[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.]