SMM Morning Comment For SHFE Base Metals November 22

SHANGHAI, November 22(SMM) –
Copper
LME copper prices opened at $8460/mt overnight before reaching a low of $8408.5/mt and a high of $8473/mt, and closed at $8470/mt, a rise of 0.27%. Trading volumes were 23,000 lots and open interest stood at 264,000 lots. The most active SHFE 2401 copper contract prices opened at 68040 yuan/mt and finished at 68230 yuan/mt overnight, up 0.25%, with the low-end of 67880 yuan/mt and the high-end of 68250 yuan/mt. Trading volume was 26,000 lots and open interest stood at 152,000 lots. On the macro front, the U.S. dollar index stopped falling as the minutes of the Federal Reserve meeting indicated that the Federal Reserve will maintain restrictive policies in the long term. In addition, the total number of existing home sales in the United States in October was recorded at an annualized rate of 3.79 million units, the lowest level since August 2010. In terms of fundamentals, premiums and discounts in East China began to move downward yesterday, mainly due to the influx of imported copper that alleviated spot tightness to a certain extent. In addition, the higher market prices inhibited downstream purchasing, and sellers lowered premiums in order to ship goods. In terms of consumption, high copper prices coupled with high premiums will suppress demand. Copper prices may remain rangebound at highs in the near term.
Aluminum
The most-traded SHFE 2312 aluminum contract opened at 18945 yuan/mt overnight, with its low and high at 18875 yuan/mt and 18965 yuan/mt before closing at 18960 yuan/mt, up 40 yuan/mt or 0.21%. LME aluminum opened at $2244.5/mt in the previous trading day, with its low and high at $2233.5/mt and $2264/mt respectively before closing at $2255.5/mt, up $11.5/mt or 0.51%.
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 opened at $2275/mt last evening and fell by 0.24% to close at $2269.5/mt, after hitting the lowest point at $2247.5/mt and the highest point at $2288/mt.
The most active SHFE 2401 lead contract prices opened at 16775 yuan/mt last evening, and closed at 16770 yuan/mt, a decrease of 0.47%, with the high-end of 16775 yuan/mt and the low-end of 16725 yuan/mt.
Zinc
LME zinc prices opened at $2579.5/mt last evening and touched an intraday high of $2590/mt, with the low-end of $2526/mt. It closed down $23.5/mt or 0.91% at $2549.5/mt Trading volumes increased to 8262 lots, with open interest rose 851 lots to 205,000 lots. LME zinc inventories increased by 9225 mt to 142750 mt, an increase of 6.91%.
The most traded SHFE 2401 opened and then lower at 21155 yuan/mt and closed at 21190 yuan/mt overnight, down 160 yuan/mt or 0.75%. The trading volume was down to 41117 lots, and open interest added 1867 lots to 88129 lots. Zinc prices are running weakly, mainly due to the increase in LME inventory to a new high since August, and the increase in production suspensions of galvanizing companies in the north under environmental protection control from November 19 to 23, resulting in poor overall consumption. SMM believes that the spot prices will consolidate at lows in the short term.
Tin
SHFE 2312 tin contract rose to 209180 yuan/mt overnight and closed at 208660 yuan/mt, down 0.07%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands changed slightly. Small brand tin ingots were offered at premiums of 0-300 yuan/mt and discounts of 0-200 yuan/mt against 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 300-700 yuan/mt imported brand tin ingots. Yesterday, the tin price inched lower. The purchasing enthusiasm of downstream companies barely improved. The trading market transactions were relatively thin.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 134950 yuan/mt, and closed at 132510 yuan/mt, down 2440 yuan/mt. Despite softening US dollar, growing supply and weak demand have prevented SHFE nickel from rising, which may move rangebound and then go down.