SMM Morning Comment For SHFE Base Metals October 10

SHANGHAI, October 10(SMM) –
Copper
SMM copper morning comments
LME copper prices opened at $8099.5/mt and closed at $8111/mt in overnight trading, a gain of 0.82%, with the low-end of $8075.5/mt and the high-end of $8126.5/mt. Trading volume was 23,000 lots, and open interest stood at 274,000 lots. The most active SHFE 2311 copper contract prices opened at 67200 yuan/mt and closed at 67110 yuan/mt last evening, up 0.34%, with the high-end of 67280 yuan/mt and the low-end of 67030 yuan/mt. Trading volumes stood at 30000 lots and open interest stood at 153,000 lots. On the macro front, the Fed Vice Chairman Jefferson said that they will pay attention to the tightening effect brought about by rising yields, and the Fed can "act cautiously" with a better balance of risks. In addition, some officials said that although the labor market is still tight, some important factors indicate that supply and demand are reaching a better balance. On Fundamentals, As of Monday October 9, SMM copper inventories across major Chinese markets stood at 114,300 mt, up 20,700 mt from last Saturday and 41,200 mt higher from the pre-holiday. The concentrated arrivals of imported copper and domestic copper in East China has caused a significant increase in inventory; in South China, mainly due to poor downstream consumption, inventory consumption was modest, which has also continued to increase inventory. In terms of consumption, some downstream companies were restocking after the holidays, but the demand was not strong. Copper prices are expected to remain rangebound at low levels as the market is awaiting US economic data.
Aluminum
MM Aluminum Morning Comment
The most-traded SHFE 2311 aluminum contract opened at 19150 yuan/mt in last night trading session, with the lowest and highest at 19085 yuan/mt and 19190 yuan/mt before closing at 19125 yuan/mt, down 125 yuan/mt, or 0.65%. Three-month LME aluminum opened at $2237/mt last evening and closed at $2247/mt, a rise of $7.5/mt or 0.33%.
Taken together, there are signs of improvement in external macro news after the holidays, interest rate hike expectations have dropped, and the U.S. dollar index has fallen slightly, which has boosted market confidence. The weak futures market after the holiday is expected to improve. The domestic manufacturing PMI data in September returned to the expansion range, further confirming the logic of improved consumption. Subsequent policy-driven and endogenous repairs are expected to promote further economic recovery. In terms of fundamentals, the domestic aluminum supply side is approaching its peak, and there is unlikely to be a significant increase in the short term. Under various factors, although domestic aluminum social inventories will accumulate in stages and increase significantly after the holidays, the total inventory is still expected to remain stable at low levels. Downstream orders may be expected to improve after the holidays. Aluminum social inventory may re-enter the state of destocking driven by concentrated downstream replenishment after the holidays, and aluminum supply and demand are still tightly balanced. In the short term, accumulation of inventory may suppress SHFE aluminium and spot premiums. But in the medium and long term, with the growth rate of the supply side narrowing significantly, aluminum supply and demand are still in a tight balance, giving support to SHFE aluminum.
Lead
SMM lead morning comments
LME lead prices opened at $2137/mt and closed at $2123.5/mt in overnight trading, down 0.82%. Entering the European session, the International Lead and Zinc Research Group (ILZSG) stated that there is an excess supply of refined lead globally, and LME lead dropped to as low as $2,120.5/mt.
The most traded SHFE 2311 lead contract opened at 16545 yuan/mt and closed at 16545 yuan/mt, down 1.16%, after briefly hitting the highest point at 16630 yuan/mt and the lowest point at 16490 yuan/mt.
Zinc
SMM zinc morning comment
Overnight, LME zinc prices opened at $2499/mt and closed up $13/mt or 0.52% at $2512/mt. The trading volume increased to 9646 lots, and open interest increased 1997 lots to 227,000 lots. LME inventories decreased by 1,950 tons to 92,425 tons; Federal Reserve officials released dovish remarks, and the US dollar weakened, reducing the pressure on LME zinc. However, against the background of continuous destocking of LME inventories, LME zinc fluctuated widely. The most-traded SHFE 2311 zinc contract opened lower at 21715 yuan/mt and fluctuated upwards before closing at 21550 yuan/mt, down 315 yuan/mt or 1.44%. Trading volume was down to 90791 lots, and open interest fell 3565 lots to 116,000 lots. Under the supply pressure brought about by the resumption of production of northern smelters, bulls left the market and were wary of the impact of US sales data.
Tin
SMM tin morning comments During the early trading yesterday, spot quotes of various domestic tin ingot brands did not change much. Among them, the quotations of small brand tin ingots stood at a maximum of 300 yuan/mt, and the premiums of delivery brands ranged from 300 yuan/mt to 600 yuan/mt. Yunxi brand was quoted with premiums of 1000-1200 yuan/mt, and imported tin brand were quoted with discounts of 500-400 yuan/mt. Tin prices fell sharply yesterday, and downstream companies in the market had a strong purchasing sentiment. Most trading companies reported that yesterday's shipments were very good, with most shipments of around 20-60 tons yesterday morning. The sharp increase in the SHFE/LME tin price ratio yesterday also led to another expansion of the profit level of tin ingot imports. Calculated with a 3% tariff, the SHFE 2311 contract import profit remained at a theoretical profit of 1,500 yuan/ton to 4,000 yuan/ton. Subsequent imports of tin ingots from overseas will supplement the supply of the domestic tin market. In addition, there has been hardly any tin ore from the Wa State of Myanmar arriving in China in September. Although Yinman Mining has driven an increase in tin ore production after the completion of technical transformation in the middle of the year, if the ban on tin mining in the Wa State lasts longer, domestic tin ore supply may return tight.
Nickel
SMM Nickel Morning Comment
On October 9, the most active SHFE nickel contract prices opened at 150370 yuan/mt and closed at 150990 yuan/mt, a decrease of 920 yuan/mt from the closing price of the previous trading day. The intraday trading was weaker than that of the previous trading day. The trading volume decreased by 93747 lots, and the open interest decreased by 719 lots. On the macro front, on October 6, the U.S. Department of Labor released two important data: the U.S. unemployment rate in September and the U.S. seasonally adjusted non-farm payrolls in September. The data reflects that the current U.S. labor market is still strong and the U.S. economy is still developing well. It may affect the subsequent rate hike process by the Federal Reserve, thereby suppressing commodity prices. From a fundamental point of view, the spot market was affected by the current low nickel price, and the spot market transactions were relatively brisk. In summary, it is expected that the nickel price may fluctuate rangebound in the near term.