SMM Morning Comment For SHFE Base Metals November 10

SHANGHAI, November 10(SMM) –
Copper
SMM Copper Morning Comment
LME copper prices opened at $8090/mt and closed at $8117.5/mt in overnight trading, a gain of 0.14%, with the low-end of $8090/mt and the high-end of $8165.5/mt. Trading volume was 17,000 lots, and open interest stood at 262,000 lots. The most active SHFE 2312 copper contract prices opened at 67140 yuan/mt and finished at 67310 yuan/mt overnight, up 0.21%, with the low-end of 67150 yuan/mt and the high-end of 67450 yuan/mt. Trading volume was 23,000 lots and open interest stood at 144,000 lots. On the macro front, the continued jobless claims in the United States rose for the seventh consecutive week to 1.83 million, the highest level since mid-April, further proving that the labor market is cooling. But Powell was hawkish in his speech, saying the Fed would not hesitate to further tighten monetary policy if appropriate. After Powell's speech, traders in U.S. short-term interest rate futures postponed expectations for the Fed's first interest rate cut from May to June next year. In terms of fundamentals, spot resources in East China continue to be tight. Premiums and discounts continued to rise yesterday and this situation is expected to ease next week; inventories in South China continue to decline. A wider price spread between the SHFE front-month and next-month copper contracts, together with high spot quotes, muted spot trading. In terms of prices, the Federal Reserve’s hawkish speak still weighs on copper prices.
Aluminum
The most-traded SHFE 2312 aluminum contract opened at 19105 yuan/mt overnight, with its low and high at 19205 yuan/mt and 19190 yuan/mt before closing at 19145 yuan/mt, down 5 yuan/mt. LME aluminum opened at $2261.5/mt on Thursday, with its low and high at $2233/mt and $2266/mt respectively before closing at $2238/mt, down $26/mt, or a decrease of 1.13%.
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. Favorable stimulus policies in China 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. Weak consumption and inventory pressure will keep aluminum prices from rising in short term. However, in the medium and long term, tightening supply and positive macro should bolster aluminum prices.
Lead
SMM Lead Morning Comments
Overnight, LME lead opened at US$2,190.5/ton and finally closed at US$2,192.5/ton, a decrease of 0.2%. LME lead stock accumulation ended briefly, and output cuts at overseas mines were reported.
The most active SHFE 2312 lead contract prices opened at 16490 yuan/mt with the high-end of 16550 yuan/mt, and finally closed at 16540 yuan/mt, up 0.27%. Open interest increased 518 lots to 64546 lots.
Zinc
SMM Zinc Morning Comment
The most-traded SHFE 2303 zinc contract fell after opening lower at $2610mt, and finally closed at $2601/mt, down $6/mt or 0.23%. Trading volume was down to 6294 lots, and open interest fell by 869 lots to 200,000 lots. LME zinc inventory shed by 1775 mt to 72475 mt. The recent positive market sentiment supported LME zinc prices to move rangebound. The most-traded SHFE 2312 zinc contract opened lower at 21620 yuan/mt and rose before closing at 2140 yuan/mt, down 85 yuan/mt or 0.39%. Trading volume was down to 42592 lots, and open interest fell 1606 lots to 90635 lots. Domestic consumer prices in October fell by 0.2% year-on-year and 0.1% month-on-month. Manufacturing activities slowed down and consumption expectations weakened.
Tin
Tin SHFE 2312 tin contract fell to 208460 yuan/mt overnight and then rose to 211280 yuan/mt, and closed at 210230 yuan/mt, down 0.06%.
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 discounts of 100 and premiums of 500 yuan/mt, versus premiums of 400-700 yuan/mt for delivery brands, premiums of 900-1100 yuan/mt for Yunxi brand, and discounts of 600 yuan/mt imported brand tin ingots. The tin price rose slightly yesterday, and the sentiment of downstream companies to buy goods continued to decline. The market transactions were relatively sluggish.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 140330 yuan/mt, and closed at 142270 yuan/mt, up 1030 yuan/mt. Trading volume increased by 66625 lots, and open interest decreased by 10669 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. 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.