SMM Morning Comment For SHFE Base Metals November 21

Published: Nov 21, 2023 09:51 (GMT+8)

Source: SMM

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SHANGHAI, November 21(SMM) –
Copper
LME copper prices opened at $8340/mt overnight before reaching a low of $8326/mt and a high of $8454/mt, and closed at $8447.5/mt, a rise of 1.67%. Trading volumes were 27,000 lots and open interest stood at 261,000 lots. The most active SHFE 2312 copper contract prices opened at 68010 yuan/mt and finished at 68460 yuan/mt overnight, up 0.82%, with the low-end of 67880 yuan/mt and the high-end of 68460 yuan/mt. Trading volume was 26,000 lots and open interest stood at 125,000 lots. On the macro front, Federal Reserve Vice Chairman Barr said that the Federal Reserve may be close to or reaching the peak interest rate. The US dollar fell, which was bullish for copper prices. In addition, SWIFT data shows that the yuan achieved a record increase in global payment share in September, with its share rising from 3.9% at the beginning of the year to 5.8%, surpassing the euro's share for the first time. On Fundamentals, as of Monday November 20, SMM copper inventories across major Chinese markets stood at 55,300 mt, up 5,500 mt from last Friday and 66,400 mt lower than the same period last year. The arrivals of imported copper in East China has increased and the spot premiums are high, thus the downstream delivery-taking has slowed down, causing the inventory to increase; in South China, due to the increase in shipments last weekend, and as some downstream companies have reduced production due to high prices, inventories have also seen an increase. In terms of consumption, downstream demand declined due to high spot premiums. In terms of price, the continued decline of the US dollar has helped copper prices rebound, but the space is limited.
Aluminum
The most-traded SHFE 2312 aluminum contract opened at 18960 yuan/mt overnight, with its low and high at 18930 yuan/mt and 18960 yuan/mt before closing at 18975 yuan/mt, up 15 yuan/mt or 0.08%. LME aluminum opened at $2213/mt in the previous trading day, with its low and high at $2211/mt and $2247/mt respectively before closing at $2244/mt, up $28/mt or 1.26%.
On the macro level, expectations for interest rate hikes in Europe and the United States continue to cool, and China continues to promote economic recovery. Fundamentally, Yunnan's production reduction coincides with the arrival of the off-season, with both supply and demand being reduced. Aluminum ingots inventories have begun to fall back recently, which should support SHFE aluminum in the short term.
Lead
LME lead open at $2293.5/mt and rose during the Asian trading hours yesterday. It rose to $2308.5/mt during the European trading hours and fell to $2266/mt, and finally dropped and closed at $2275/mt, down 0.94%.
The most traded SHFE 2312 lead contract opened at 17010 yuan/mt last night, hitting the lowest point at 16895 yuan/mt, and closed at 16960 yuan/mt, down 0.85%.
Zinc
LME zinc opened at $2557.5/mt on Monday night, touching a high and a low of $2589/mt and $2550/mt respectively. LME zinc rallied and closed up $14/mt or 0.55% to $2573/mt. The trading volume fell to 7381 lots, and open interest lost 225 lots to 205,000 lots. LME zinc inventory increased by 475 mt to 133525 mt, an increase of 0.36%. The continuous decline of the US dollar index boosted the trend of non-ferrous metals.
The most-traded SHFE 2401 zinc contract opened at 21370 yuan/mt overnight and fell to 21270 yuan/mt before rallying to a peak of 21420 yuan/mt. It eventually settled up 65 yuan/mt or 0.3%. Trading volume were 46838 lots, and open interest increased by 3008 lots to 84487 lots. According to customs data, 48,000 mt of refined zinc and 434,000 mt of zinc concentrate were imported in October, which are higher than the previous estimates. Subsequent imports are expected to remain high, and the pressure on the supply side is still high. There is limited room for zinc price recovery.
Tin
SHFE 2312 tin contract fell to 207580 yuan/mt overnight and closed at 209070 yuan/mt, down 0.5%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands changed little. Small brand tin ingots were offered at premiums of 0-300 yuan/mt over SHFE 2312 tin contract, versus premiums of 400-700 yuan/mt for delivery brands, premiums of 900-1100 yuan/mt for Yunxi brand, and discounts of 300-500 yuan/mt imported brand tin ingots. Yesterday, the tin price generally maintained sideways fluctuations. The purchasing enthusiasm of downstream companies has rebounded. The trading market transactions were relatively brisk.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 135780 yuan/mt, and closed at 134950 yuan/mt, down 1340 yuan/mt. Trading volume fell by 31042 lots, and open interest decreased by 3730 lots. On the macro front, expectations for the Federal Reserve to raise interest rates in December continue to cool down, and the market is optimistic that there will be four interest rate cuts next year. The macro sentiment is positive for commodities. From a fundamentals perspective, pure nickel inventory fell slightly over this weekend. Yesterday’s spot market transactions were still weak. Nickel price is expected to be rangebound

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