SMM Morning Comment For SHFE Base Metals October 18

SHANGHAI, October 18(SMM) –
Copper
SMM Copper Morning Comment
LME copper prices opened at $7914/mt and closed at $7961/mt in overnight trading, a drop of 0.29%, with the low-end of $7891.5/mt. Trading volume was 21,000 lots, and open interest stood at 271,000 lots. The most active SHFE 2311 copper contract prices opened at 65800 yuan/mt and closed at 66410 yuan/mt last evening, up 0.36%, with the high-end of 66450 yuan/mt and the low-end of 65800 yuan/mt. Trading volumes stood at 24,000 lots and open interest stood at 151,000 lots. On the macro front, retail sales in the US increased by 0.7% in September, higher than expected 0.3%. This shows that U.S. consumption is still hot, and the market is betting on the probability of raising interest rates in December. The higher-than-expected inflation and consumption data may make the problems facing the Federal Reserve more difficult. In terms of fundamentals, spot transactions in East China were quiet yesterday, and downstream purchases were made at lower prices. We are concerned about whether the supply of imported goods will be reduced due to import losses in the future, thus affecting the overall supply. There is not much supply of goods available for circulation in South China after the delivery, and cargo holders have a strong sentiment to raise prices. The premiums and discounts in South China remained high yesterday. Demand currently remains relatively stable. The copper prices will remain at low levels constrained by the US dollar.
Aluminum
Overnight, the most-traded SHFE 2311 aluminum contract opened at 18,820 yuan/mt, with its lowest and highest at 18,885 yuan/mt and 18,790 yuan/mt before closing at 18,880 yuan/mt, up 100 yuan/mt or 0.53% compared with the previous trading day. LME aluminum opened at $2,183.5/mt on Tuesday, with its high and low at $2,186/mt and $2,158.5/mt respectively before closing at $2,177/mt, a decrease of $4/mt or 0.18%.
Overall, external macro news disturbed market. The swinging expectations of short-term interest rate hikes and the intensification of the Palestinian-Israeli conflict added uncertainty to market. Domestic favorable policies continue to be issued, promoting economic recovery. Although social inventories gradually accumulated after the holiday, the total inventory was still at a historical low for the same period, which had not brought much negative effects on aluminum prices. In the medium to long term, aluminum supply and demand may maintain a tight balance, and aluminum prices are expected to fluctuate at high levels, with limited downside space.
Lead
SMM Lead Morning Comments
Overnight, LME lead opened at US$2,074.5/ton. Entering the European period, the pressure on LME lead storage became more prominent, with a daily increase of nearly 10,000 tons, breaking through the 100,000 ton mark, setting a new high since May 25, 2021. LME lead prices finally closed at US$2,091.5/ton, an increase of 0.67%.
The most-traded SHFE 2311 Lead contract opened at 16255 yuan/mt in overnight trading, with the high-end of 16455 yuan/mt. The contract closed at 16345 yuan/mt, an increase of 0.8%. Open interest stood at 70976 lots, a decrease of 3652 lots from the previous trading day.
Zinc
SMM Zinc Morning Comments
Data source: SMM
Last evening, LME zinc prices opened at $2443.5/mt and went down to close at $2424/mt, down $21.5/mt or 0.88%. Trading volume increased to 10089 lots, and open interest decreased 2260 lots to 216,000 lots. LME zinc inventory decreased by 1600 mt to 81850 mt, a drop of 1.92%. U.S. retail sales data for September far exceeded expectations, and the market is betting on an increased probability of interest rate hikes. The weakening of the U.S. dollar has put downward pressure on LME zinc.
Overnight, the most-traded SHFE 2311 zinc contract opened at 20830 yuan/mt and hit a high of 21220 yuan/mt before closing at 21180 yuan/mt, up 165 yuan/mt or 0.79%. Trading volume was 67480 lots, and open interest decreased by 3374 lots to 81604 lots. Overnight short positions were reduced. Spot transactions improved as zinc prices fell, providing support for zinc prices. However, the increase in the supply will limit the upside room.
Tin
SHFE 2311 tin contract dropped slightly after the opening of yesterday night session. After reaching a relatively low of 215,630 yuan/mt, it gradually rebounded and finally closed at 218,300 yuan/mt, up 0.25%.
Spot premiums and discounts were basically unchanged from yesterday. Small brand tin ingots were offered at premiums of 0-500 yuan/mt, premiums of 400-700 yuan/mt for delivery brands, premiums of 900-1,200 yuan/mt for Yunxi brands, and discounts of 200-500 yuan/mt for imported tin brands. The overall tin price yesterday still maintained a high and fluctuating trend, but downstream companies were less willing to purchase. Most trading companies reported that most of the shipments were few yesterday. Only a few companies were able to ship around 20 mt. However, after tin prices rebounded in the past two days, smelting companies’ overall shipments increased compared with last week.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 152,980 yuan/mt, and closed at 149,760 yuan/mt, down 2,620 yuan/mt. Trading volume rose by 4,363 lots, and open interest decreased by 3,518 lots.
On the macro front, raising interest rates was on the way, and market was still controversial about whether to it will happen later this year. Currently, prices of US dollar and gold continued to move upward, and commodities were under downward pressure. In the fundamentals, the demand for domestic electrowinning nickel remained stable and the purchase amount of Jinchuan nickel plate was acceptable. Norilsk nickel transactions in spot market were sluggish and demand dropped. In summary, it is expected that nickel prices will continue to rebound slightly in the future.