SMM Morning Comment For SHFE Base Metals (Nov 13)

SHANGHAI, Nov 13 (SMM) –
Copper
US Fed's Future Interest Rate Cut Expectations Weaken, Copper Prices Continue to Be Under Pressure [SMM Copper Morning Comment]

LME copper opened at $9,128/mt overnight, initially dipped to $9,107/mt, then rose to an intraday high of $9,218/mt, but fell all the way towards the end of the session, finally closing at $9,144.5/mt, down 1.66%. Trading volume reached 30,000 lots, and open interest reached 273,000 lots. The most-traded SHFE copper 2412 contract opened at 74,820 yuan/mt overnight, initially peaked at 75,210 yuan/mt, then declined all the way, hitting a low of 74,660 yuan/mt near the end of the session, and finally closed at 74,680 yuan/mt, down 1.46%. Trading volume reached 40,000 lots, and open interest reached 149,000 lots. Macro side, Trump promised in his campaign to intensify the trade war, imposing a general tariff of 10% to 20% on all US imports and a special punitive tariff of 60% to 100% on Chinese goods. Economists warn that such measures could trigger inflation. US Fed's Kashkari stated that if inflation unexpectedly rises in December, interest rate cuts might be paused, which is bearish for copper prices. Fundamentally, supply side, some domestic sources are expected to decrease, but a large amount of imported copper will flow into domestic trade this week, providing some replenishment. Demand side, copper prices fluctuated down to a low range, prompting downstream bargain hunting, with transactions slightly warming up compared to the previous day. Price side, the US dollar index continued to rise, and copper prices are expected to remain under pressure today.

Aluminum
The US dollar index continues to rise, aluminum futures prices fluctuated downward overnight. [SMM Aluminum Morning Meeting Summary Nov 13]

Overnight, the most-traded SHFE aluminum 2412 contract opened at 20,870 yuan/mt, reaching a high of 20,955 yuan/mt and a low of 20,870 yuan/mt, and closed at 20,905 yuan/mt, down 215 yuan/mt from the previous close, a decrease of 1.02%. The trading volume was 44,200 lots, and the open interest was 169,000 lots, with a daily reduction of 2,500 lots. On the previous trading day, LME aluminum opened at $2,576/mt, reached a high of $2,585.5/mt and a low of $2,544/mt, and closed at $2,565/mt, down $21.5/mt, a decrease of 0.83%.

Summary: On the macro front, overseas, since Trump won the election last week, the US dollar index has continued to rise, with the US dollar reaching its highest level in a year, putting continuous pressure on non-ferrous metals. Domestically, the first round of fiscal measures was relatively lower than expected, mainly the 6 trillion yuan incremental debt financing, which may help improve corporate balance sheets and boost employment and income expectations for residents. On the fundamentals side, domestic aluminum ingot inventory remained below 600,000 mt during the week. Recently, transportation conditions in north-west China have improved, forcing the continuous destocking trend of aluminum ingot inventory to be interrupted, and an inventory inflection point has initially formed. The low inventory support for aluminum futures prices may gradually weaken. Alumina spot supply remains tight, coupled with production cuts and suspensions by some enterprises, but non-ferrous metal agreement holders have voiced concerns over the current significant fluctuations in alumina, leading to a slight retreat in market sentiment and high-level adjustments in alumina prices. Overall, domestic aluminum remains in a low inventory and high-cost state, but the support to aluminum prices has weakened. In the short term, aluminum prices may fluctuate upward, with continued attention to macro sentiment changes and fluctuations in alumina prices both domestically and internationally.
Lead
Supply Issues Push Lead Prices Up, Attention Needed on Secondary Lead Profit Recovery [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,027/mt. With the strengthening of the US dollar index, base metals were under pressure, and LME lead hovered in the range of $2,020-2,030/mt for most of the day. It rose above $2,030/mt at night, driven by the strong performance of SHFE lead, but failed to hold steady and finally closed at $2,024/mt, up 0.02%.

Overnight, the most-traded SHFE lead 2412 contract opened at 16,970 yuan/mt. Bulls entered the market intensively at the beginning of the session, pushing SHFE lead to a strong rise, reaching a high of 17,190 yuan/mt, a new high in nearly a month. In the latter part of the trading session, SHFE lead hovered at highs and finally closed at 17,145 yuan/mt, up 1.12%. Its open interest reached 45,598 lots, an increase of 385 lots from the previous trading day.

Macro side, US Trump continued to finalise cabinet picks. A Florida congressman might become the US National Security Advisor. Paulson withdrew from the race for the next US Treasury Secretary, and Trump's key advisers supported Bessent. After Trump's election, the US Fed's voting members spoke for the first time: they will observe the post-election situation before judging the impact and are ready to respond to risks. The US Fed reported that the US one-year inflation expectations in October fell to a four-year low, and the labour market is expected to improve.

Fundamentally, the supply issues of lead ingots are prominent. On one hand, the SHFE lead 2411 contract is nearing delivery, and spot market circulation is limited. On the other hand, due to smog warnings in Henan, vehicle restrictions have slowed lead ingot shipments, while some medium and large secondary lead enterprises in Anhui are still in a state of reduced or halted production. Both primary and secondary lead are generally sold at a premium to the SMM 1# lead average price. Additionally, we need to continue to monitor the profit recovery of secondary lead and the resumption of production by smelters after the lead price rebounds.

Zinc
Macro sentiment continues, SHFE zinc opens lower [SMM Zinc Morning Comment Nov 13]

US Fed's Kashkari: Interest rate cuts may be paused under certain circumstances; OPEC downgrades global demand growth forecast again; Israeli Defense Minister: No ceasefire in Lebanon; Experts: Stable real estate tax policy may be introduced soon; From 2025, two more statutory holidays will be added.

Overnight, LME zinc opened at $2,979/mt, briefly fluctuated and reached a high of $2,990/mt at the beginning of the session, then fell all the way to a low of $2,916/mt at midday. It then rebounded to near the daily average line and fluctuated rangebound near the close, finally closing down at $2,946.5/mt, down $33.5/mt, a decrease of 1.12%. Trading volume increased to 10,829 lots, and open interest decreased by 1,451 lots to 244,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 5-day moving average forming resistance above. LME zinc inventory increased by 1,025 mt to 245,525 mt, an increase of 0.42%. The US dollar index continued to rise, putting pressure on LME zinc prices, and the previous bearish sentiment in the market continued, causing LME zinc to decline.

Overnight, the most-traded SHFE zinc 2412 contract opened at 24,710 yuan/mt, initially dipped to 24,705 yuan/mt, then fluctuated around the daily average line, reaching a high of 24,845 yuan/mt during the session, and finally closed down at 24,735 yuan/mt, down 115 yuan/mt, a decrease of 0.46%. Trading volume decreased to 61,350 lots, and open interest increased by 226 lots to 104,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the lower Bollinger Band providing support. The bearish sentiment in the market has not yet eased, coupled with the drag from the overseas market, causing SHFE zinc to open lower and fluctuate downward.
Tin
SHFE tin prices moved down after opening lower during the night session, significantly influenced by the overseas market [SMM Tin Morning News Nov 13]

Yesterday, the spot tin market saw moderate trading, with trade companies' quotations remaining stable and showing no significant fluctuations. The price range of various domestic brands tin ingots was relatively fixed. Small brand tin ingots and imported tin ingots had a slight discount against the SMM 1# tin ingot price, while delivery brand prices and Yunnan Tin brand tin ingots had a slight premium against the SMM 1# tin ingot price. In yesterday's market, SHFE tin prices fluctuated downward, and during the night session, domestic prices opened low and moved lower, driven by the LME. Some downstream enterprises made small replenishments, while others waited for lower replenishment positions. Regarding trade companies, most had trading volumes of 10-20 mt, with a few achieving volumes of more than two truckloads. Overall, the market trading atmosphere remained active.
Nickel
On November 12, Jinchuan nickel was quoted at a premium of 1,800-2,000 yuan/mt, with an average of 1,900 yuan/mt, up 100 yuan/mt compared to the previous trading day. Norilsk nickel was quoted at a discount of 400-0 yuan/mt, with an average of 200 yuan/mt, remaining flat compared to the previous trading day. On the morning of November 12, the futures market fluctuated downward, and the spot market premium saw a slight increase compared to the previous working day. Nickel briquette prices were 127,250-127,950 yuan/mt (out of stock), down 150 yuan/mt compared to the previous trading day. The price spread between nickel sulphate and nickel briquette was about 4,305 yuan/mt (nickel sulphate prices were 4,305 yuan/mt lower than nickel briquette prices).