SMM Morning Comment For SHFE Base Metals (Oct 10)

SHANGHAI, Oct 10 (SMM) –

Copper

US Dollar Index Rose to Two-Month High, Copper Prices Faced Pressure [SMM Copper Morning Comment]

Overnight, LME copper opened at $9,720.5/mt, initially reached a high of $9,733/mt, and then declined to a low of $9,606.5/mt during the session. It fluctuated upward towards the end, closing at $9,684/mt, a decrease of 0.76%. Trading volume reached 22,000 lots, and open interest was 297,000 lots. Overnight, the most-traded SHFE copper 2411 contract opened at 76,880 yuan/mt, initially dipping to 76,460 yuan/mt, then fluctuating upward to a high of 77,210 yuan/mt, finally closing at 77,000 yuan/mt, a decrease of 0.79%. Trading volume was 47,000 lots, and open interest was 160,000 lots. Macro side, the US Fed meeting minutes showed differences in the September interest rate cut, with some officials favoring a more gradual path to normal rates. Fed's Daly suggested there might be one or two more rate cuts this year. The US dollar index rose to a two-month high, putting pressure on copper prices. Fundamentally, although copper prices have clearly fallen, downstream purchasing sentiment remains lukewarm, mainly driven by just-in-time inventory replenishment. Post-holiday restocking demand has not yet significantly emerged. If copper prices continue to fall, consumption may pick up. Overall, with the high US dollar index and domestic consumption recovering slowly, copper prices face some upward pressure. If consumption recovers significantly in the near term, copper prices may stabilize.

Aluminum

Macro sentiment shifted, leading to a decline in overnight aluminum futures; but fundamentals are expected to provide good support [SMM Aluminum Morning Comment Oct 10]

SMM, Oct 10: The most-traded SHFE aluminum 2411 contract opened at 20,390 yuan/mt, reaching a high of 20,480 yuan/mt and a low of 20,300 yuan/mt, closing at 20,460 yuan/mt, down 105 yuan/mt, a decrease of 0.7%. Yesterday, LME aluminum opened at $2,571.5/mt, with a high of $2,579/mt and a low of $2,505/mt, closing at $2,545/mt, down $25/mt, a decrease of 0.97%.

Summary: On the macro front, the US Fed's September meeting minutes revealed significant internal disagreements on interest rates, causing a substantial shift in the overall macro environment, which drove the US dollar index to rebound sharply, suppressing the metals market. Domestically, the "systematic implementation of a package of incremental policies" meeting content was slightly below market expectations. Fundamentally, expectations for production cuts in Yunnan in Q4 have decreased, combined with the release of some new and resumed capacity, maintaining a growth trend in the domestic aluminum market supply side. Cost side, the tight balance in spot alumina persists, making domestic aluminum costs more likely to rise than fall. Demand side, October remains a small peak season for downstream aluminum processing, with industry operations largely stable, and future attention is needed on order conditions. Overall, with no prominent supply-demand mismatch in the aluminum market fundamentals, short-term fluctuations may follow macro sentiment. Future attention should focus on domestic consumption and changes in international macro sentiment.

Lead

Macro bullish factors are nearing their end, putting pressure on lead prices to fall back [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,097.5/mt, consolidated around the daily moving average during the Asian session, briefly touched a high of $2,110/mt, and then fluctuated downward during the European session, hitting a low of $2,047.5/mt. Before the close, it slightly rebounded and finally ended at $2,076/mt, down $30/mt, a decrease of 1.42%.

Overnight, the most-traded SHFE lead 2411 contract opened at 16,665 yuan/mt, initially dipped to 16,515 yuan/mt, then slightly rose, briefly touching a high of 16,685 yuan/mt, and finally closed at 16,615 yuan/mt, down 235 yuan/mt, a decrease of 1.39%.

Macro side, the dollar continued to fluctuate upward, with strong market risk aversion sentiment. Traders are closely watching the Middle East conflict and China's stimulus measures for their impact on metal consumption. Fundamentals side, the "trade-in" policy for electric bicycles still requires ongoing attention for its effect on battery companies' orders. On the first day after the holiday, with a slightly bullish atmosphere, some purchasing demand was brought forward. After the lead price correction, downstream companies became cautious again, and transactions of primary and secondary refined lead decreased. As refined lead supply gradually recovers in October, smelters' post-holiday inventory reduction slowed, and holders continued to transfer lead ingots to delivery warehouses. Downstream buyers were cautious about price drops, showing low enthusiasm for purchasing, and lead prices may continue to fluctuate downward.

Zinc

US Dollar Strengthens, LME Zinc Under Pressure [SMM Zinc Morning Comment Oct 10]

Overnight, the US Fed meeting minutes showed a split on the rate cut path; Daly indicated there might be one or two more rate cuts this year; North Korea announced a permanent cut-off and blockade of the southern border with South Korea; US officials believe Israel accepts the argument of striking Iran's conventional military targets; OpenAI is expected not to achieve profitability before 2029; the Ministry of Finance will introduce measures to enhance counter-cyclical fiscal policy adjustment on October 12; China and the EU will continue consultations on the electric vehicles anti-subsidy case; Guotai Junan and Haitong Securities resume trading today.

Overnight, LME zinc opened at $3,082.5/mt, initially fluctuating along the daily moving average, briefly rising to a high of $3,109.5/mt during European trading hours. Subsequently, bulls reduced positions, and LME zinc fluctuated downward, hitting a low of $2,977.5/mt during the night session, finally closing down at $3,032.5/mt, a decrease of $44/mt, or 1.43%. Trading volume fell to 14,258 lots, and open interest decreased by 283 lots to 261,000 lots. Overnight, LME zinc recorded a large bearish candlestick, with LME inventory increasing by 1,625 mt to 244,025 mt, an increase of 0.67%. After the Fed meeting, expectations for a US rate cut in November weakened significantly, strengthening the dollar and putting pressure on base metals, with LME zinc shifting downward. Attention is on the US CPI data tonight.

Overnight, the most-traded SHFE zinc 2411 contract opened at 24,900 yuan/mt. Initially, bulls reduced positions, and SHFE zinc fluctuated downward to a low of 24,650 yuan/mt. Later, shorts reduced positions, and SHFE zinc fluctuated upward, reaching a high of 24,935 yuan/mt at the end of the session, finally closing down at 24,865 yuan/mt, a decrease of 175 yuan/mt, or 0.7%. Trading volume decreased to 90,166 lots, and open interest decreased by 2,478 lots to 114,000 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 5-day moving average forming resistance above. Macro sentiment weakened, the ferrous metals market returned to a downward trend, and with the weakening of Fed rate cut expectations, base metals broadly declined, with SHFE zinc shifting downward. SHFE zinc is expected to fluctuate today.

Tin

During the night session, SHFE tin prices fluctuated at low levels. Yesterday, the spot market was relatively active [SMM Tin Morning Comment Oct 10]

SMM, October 10: Yesterday, the most-traded SHFE tin contract closed at 264,520 yuan/mt, down 1,060 yuan/mt, a decrease of 0.40%, with a high of 264,900 yuan/mt and a low of 262,230 yuan/mt. During the morning session, trading companies quoted domestic tin ingot brands with little change in premiums compared to recent days. Small brand tin ingots were quoted at premiums of 0-500 yuan/mt against the SHFE 2411 contract, delivery brand prices at premiums of 200-700 yuan/mt against the SHFE 2411 contract, Yunnan Tin brand at premiums of 600-900 yuan/mt against the SHFE 2411 contract, and imported tin brand spot prices at -400 to -200 yuan/mt against the SHFE 2411 contract. Tin prices fluctuated rangebound during the morning session, with some companies restocking as needed. Some trading companies completed transactions of about one truckload, while a few completed two truckloads. Overall, the spot market was relatively active yesterday.

Nickel

On October 9, Jinchuan nickel was quoted at a premium of 1,300-1,500 yuan/mt, with an average of 1,400 yuan/mt, unchanged from the previous trading day. Norilsk nickel was quoted at a discount of 400-200 yuan/mt, with an average of 300 yuan/mt, up 50 yuan/mt from the previous trading day. On the morning of October 9, futures prices fell, and the spot premium spread remained stable overall. Nickel briquette prices were 134,200-134,600 yuan/mt, down 350 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was approximately 6,786 yuan/mt (nickel sulphate prices were 6,786 yuan/mt lower than nickel briquette prices).