SMM Evening Comments (Nov 18): Shanghai Nonferrous Metals Closed Mixed on Hawkish Fed Voices

SHANGHAI, Nov 18 (SMM) – Shanghai nonferrous metals closed mixed as the market players digested the hawkish signals delivered the US Fed officials.

Shanghai copper fell 0.87%, aluminium added 1.72%, lead lost 0.13%, zinc advanced 0.62%, tin was flat, and nickel shed 0.4%.

Copper: The most-traded SHFE 2212 copper closed down 0.87% or 580 yuan/mt at 65,740 yuan/mt, with open interest down 9,991 lots to 148,056 lots.

On the macro front, (1) US Philadelphia Fed Manufacturing Index was -19.4 in November, against a previous reading of -8.7 and a forecast of -6.2. (Bearishe ☆) (2) U.S. initial jobless claims for the week of November 12 came in at 222,000, with a previous value of 226,000 and a forecast of 225,000. (Bearish ☆)

In the spot market, the market demand was slightly revived by falling SHFE copper price today. Currently, the spread between SHFE 2212 and 2301 stabilised at 300 yuan/mt, which was close to the cost of delivery the futures contract. The warrants are likely to flow into the market next Monday, and the spot premiums remained at around 400 yuan/mt.

Aluminium: The most-traded SHFE 2212 aluminium closed up 1.72% or 325 yuan/mt at 19,200 yuan/mt, with open interest up 3,269 lots to 182,976 lots.

With the suspension of production reduction and the continued production resumption, the bullish expectations have weakened. Coal prices have been under pressure recently, thus cost support has also declined. The driving force for aluminium prices will come from the improvement of macro sentiment and expected demand recovery. As the domestic bullish factors continue to be digested, the short-term aluminium prices are expected to fluctuate around 19,000 yuan/mt before the US Fed raises interest rate again.

Lead: The most-traded SHFE 2212 lead closed down 0.13% or 20 yuan/mt at 15,670 yuan/mt, with open interest down 3,741 lots to 44,796 lots.

In the spot market, the cargo holders quoted based on the market dynamics, and secondary lead was mostly quoted with large discounts. The downstream players purchased on demand mainly in the form of long-term orders, and the retail market was relatively modest. The most-traded SHFE lead is likely to fall in the near term.

Zinc: The most-traded SHFE 2212 zinc closed up 0.62% or 150 yuan/mt at 24,395 yuan/mt, with open interest down 2,465 lots to 84,174 lots.

SMM zinc ingot social inventory across seven major markets in China fell 1,700 mt to 58,800 mt, and the pivot has not yet come. Short-term zinc price is likely to remain volatile.

Tin: The most-traded SHFE 2212 tin closed up 0.02% or 40 yuan/mt at 185,080 yuan/mt, with open interest down 2,250 lots to 43,877 lots.

In the spot market, the mainstream smelters retained the willingness to make quotes, and the spread among smelters was narrow; some smelters raised the quotes along with SHFE tin. The spot premiums offered by the traders were stable, and some refrained from making quotes due to difficulties in sales. The sales of domestic brands were slack, but the falling prices boosted the market transactions to some extent. The downstream players still purchased on rigid demand.

Nickel: The most-traded SHFE 2212 nickel closed down 0.4% or 810 yuan/mt at 200,200 yuan/mt, with open interest down 3,379 lots to 62,278 lots.

In the spot market, the premiums of Jinchuan nickel stood at 3,800-4,000 yuan/mt, with an average of 3,900 yuan/mt, up 250 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 2,000-2,200 yuan/mt, with an average of 2,100 yuan/mt, down 50 yuan/mt on a daily basis. SHFE nickel dropped, but the absolute spot prices were still high, hence the trading market was quiet. For nickel briquette, the prices stood between 200,200-201,400 yuan/mt, up 250 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.]