SMM Morning Comment For SHFE Base Metals November 9

SHANGHAI, November 9(SMM) –
Copper
SMM Copper morning comment
LME copper prices opened at $8182.5/mt and closed at $8106/mt in overnight trading, a drop of 1.09%, with the low-end of $8101/mt and the high-end of $8192.5/mt. Trading volume was 17,000 lots, and open interest stood at 263,000 lots. The most active SHFE 2312 copper contract prices opened at 67400 yuan/mt and closed at 67110 yuan/mt last evening, down 0.33%, with the high-end of 67550 yuan/mt and the low-end of 67050 yuan/mt. Trading volumes stood at 22,000 lots and open interest stood at 145,000 lots. On the macro front, Fed Chairman Powell urged Fed economists to be flexible in their forecasting methods and did not comment on monetary policy or the economic outlook in his speech. In Europe, Bank of England Governor Bailey said it was too early to discuss interest rate cuts. The next inflation number is expected to be considerably lower. In terms of fundamentals, premiums and discounts in East China surged again yesterday. The inflow of imported copper was limited, which did not ease the tightness of spot resources. Sellers raised prices; inventories in South China were still at low levels. Although downstream purchasing enthusiasm was not strong, supported by low inventories, spot quotes were still at high levels. In terms of price, the chairman of the Federal Reserve did not comment on subsequent monetary policy, and market concerns dragged down copper prices.
Aluminum
The most-traded SHFE 2312 aluminum contract opened at 19260 yuan/mt overnight, with its low and high at 19205 yuan/mt and 19285 yuan/mt before closing at 19205 yuan/mt, up 5 yuan/mt. LME aluminum opened at $2273.5/mt on Wednesday, with its low and high at $2262/mt and $2279/mt respectively before closing at $2264/mt, down $17/mt or 0.07%.
There is still great uncertainty in overseas macro front. U.S. economic data shows that the U.S. economy is resilient. The U.S. dollar index fluctuates at a high level, suppressing commodities. China is expected to be able to achieve GDP growth of 5% this year. Favorable policies will continue to boost aluminum consumption at the end of the year. In terms of fundamentals, aluminium smelters in Yunnan have started to cut production, with 1.15 million mt of capacity estimated to be reduced. The consumption is switching from peak season to off-season, but the growth of aluminum ingot social inventory has slowed down. In the short term, aluminum price will move at high levels due to the favorable macroeconomic conditions and the tightening of the supply side.
Lead
SMM Lead Morning Comment
SHANGHAI, Nov 9 (SMM) -
Overnight, LME lead prices opened at $2179/mt. Entering the European session, an accident occurred at a Russian lead-zinc mine and expectations of tighter raw material supply caused both lead and zinc prices to rise, with LME lead reaching a maximum of $2,200/mt. The contract finally closed at $2,197/mt, an increase of 0.18%.
The most active SHFE 2312 lead contract prices opened at 16450 yuan/mt with the high-end of 16550 yuan/mt, and finally closed at 16530 yuan/mt, up 0.36%. Open interest were up 1151 lots to 65161 lots.
Zinc
SMM Zinc Morning Comment
LME zinc prices opened at $2570.5/mt and closed up $31/mt or 1.2% at $2607/mt last evening. The trading volume increased to 10180 lots, and open interest added 1644 lots to 201,000 lots. LME zinc inventory shed by 1675 mt to 74250 mt. A fire broke out at the Ozernoye mining and processing complex in the Republic of Buryatia, Russian Federation. The fire has been stopped and there are no casualties yet. The mine can produce 600,000 mt of zinc ore and 80,000 mt of lead ore with physical content each year. It is in a state of evaluation as to whether its operation will be affected next year, which has triggered market concerns about supply, boosting LME zinc.
The most traded SHFE 2312 zinc contract opened at 21795 yuan/mt and closed at 21675 yuan/mt overnight, up 45 yuan/mt or 0.21%. The trading volume was down to 49419 lots, and open interest decreased 332 lots to 90719 lots. Domestic fundamental support was weak. SMM's refined zinc production broke a new high in October and reached 600,000 mt. Supply pressure was strong.
Tin
SHFE 2312 tin contract rose to 211570 yuan/mt overnight and closed at 210570 yuan/mt, up 0.51%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands did not change much. Small brand tin ingots were offered at premiums of 200-400 yuan/mt, versus premiums of 400-800 yuan/mt for delivery brands, premiums of 1000-1200 yuan/mt for Yunxi brand, and discounts of 500 yuan/mt imported brand tin ingots. Tin prices continued to rise yesterday, and the sentiment of downstream companies to buy goods declined slightly. The trading market transactions showed a divided situation. Some trading companies traded 30-40 mt, and some trading companies reported thin transactions. Generally speaking, the spot market transactions cooled down slightly yesterday.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 140740 yuan/mt, and closed at 141240 yuan/mt, down 210 yuan/mt. Trading volume rose 66506 lots, and open interest increased by 412 lots. On the macro front, the US unemployment rate data released last Friday was lower than expected, the current weakness in the U.S. job market will provide some support for ending the process of the Federal Reserve's interest rate hike. However, yesterday's hawkish speech by Federal Reserve officials led to growing market expectations for a December Federal Reserve interest rate hike. From a fundamentals perspective, the trend of pure nickel inventory accumulation remains unchanged, and downstream demand has not yet improved. Yesterday’s spot market transactions were still weak. However, due to the positive macro sentiment, it is expected that nickel prices may rebound slightly in the future.