SMM Evening Comments (Nov 23): Shanghai Nonferrous Metals Closed Mostly with Losses on Spreading Pessimism

SHANGHAI, Nov 23 (SMM) – Shanghai nonferrous metals closed mostly with losses as the base metals market saw the mixture of strong fundamentals and weak expectations with the spreading of bearish sentiment.

Shanghai copper added 0.42%, aluminium slid 0.18%, lead lost 0.79%, zinc shed 1.01%, tin rose 2.12%, and nickel lost 0.11%.

Copper: The most-traded SHFE 2212 copper closed up 0.42% or 270 yuan/mt at 64,890 yuan/mt, with open interest down 11,767 lots to 109,897 lots.

On the macro front, (1) US Richmond Fed Manufacturing Index came in at -9 in November, against a previous value of -10 and a forecast of -8. (bullish ☆) (2) Fed's Mester delivered a hawkish statement: the Fed policy has just entered a restrictive stance and it is not anywhere close to stopping rate hikes. (bearish ☆)

In the spot market, SHFE copper 2212 and 2301 spread narrowed to 200 yuan/mt, weighing slightly on spot premiums. Some cargoes were transferred to Guangdong with wide price spread between the two regions. The sources available in the Shanghai market dropped, and the local premiums remained firm.

Aluminium: The most-traded SHFE 2212 aluminium closed down 0.18% or 35 yuan/mt at 18,895 yuan/mt, with open interest down 13,249 lots to 139,811 lots.

SHFE aluminium price and spot premiums both fell slightly today, and the market players stayed cautious regarding the follow-up evolvement of pandemic situation. The downstream players were still not active in purchasing. Therefore, though the inventory was low, the supply was not in a shortage. After Gongyi was freed from pandemic lockdown, some of the shipments might be delivered to Gongyi rather than east China. Therefore, absolutely low inventory will still underpin the spot premiums.

Lead: The most-traded SHFE 2301 lead closed down 0.79% or 125 yuan/mt at 15,610 yuan/mt, with open interest down 5,703 lots to 87,874 lots.

In the spot market, the smelters still mainly delivered the long-term orders approaching the end of the month. The discounts of non-deliverable brands expanded slightly, while the downstream demand was muted. The investors shall watch if SHFE lead could stay above 15,600 yuan/mt overnight.

Zinc: The most-traded SHFE 2212 zinc closed down 1.01% or 240 yuan/mt at 23,600 yuan/mt, with open interest down 12,826 lots to 54,585 lots.

The base metals market saw the mixture of strong fundamentals and weak expectations with the spreading of bearish sentiment. For zinc, the price is still under pressure with expected supply growth and sluggish demand.

Tin: The most-traded SHFE 2212 tin closed up 2.12% or 3,770 yuan/mt at 182,000 yuan/mt, with open interest up 61 lots to 38,337 lots.

In the spot market, SHFE tin rose again, and the downstream players were strongly wait-and-see, hence the market transactions were lacklustre. SHFE warrants added 32 mt to 3,529 mt, and LME tin inventory fell 25 mt to 3,305 mt.

Nickel: The most-traded SHFE 2212 nickel closed down 0.11% or 210 yuan/mt at 198,610 yuan/mt, with open interest up 2,510 lots to 57,505 lots.

In the spot market, Jinchuan nickel was in premiums of 3,600-4,000 yuan/mt, with an average of 3,800 yuan/mt, down 450 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 2,300-2,500 yuan/mt, with an average of 2,400 yuan/mt, down 50 yuan/mt on a daily basis. SHFE nickel was relatively resilient recently subject to the news front, and the absolute spot price was also high despite falling premiums. Hence the market transactions remained poor. For nickel briquette, the prices stood between 200,700-201,600 yuan/mt, up 500 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.]