SMM Morning Comment For SHFE Base Metals October 13

SHANGHAI, October 13(SMM) –
Copper
SMM Copper Morning Comment
LME copper prices opened at $8069.5/mt and closed at $7964/mt in overnight trading, a drop of 0.46%, with the low-end of $7957/mt and the high-end of $8069.5/mt. Trading volume was 16,000 lots, and open interest stood at 270,000 lots. The most active SHFE 2311 copper contract prices opened at 66610 yuan/mt and finished at 66390 yuan/mt last evening, down 0.46%, with the low-end of 66310 yuan/mt and the high-end of 66750 yuan/mt. Trading volume was 26,000 lots, and open interest stood at 159,000 lots. On the macro front, the CPI data released on Thursday unexpectedly rebounded, strengthening the market's expectations for the Federal Reserve to be "higher and longer" and to raise interest rates again this year. The U.S. dollar index rose, weighing on copper prices. In terms of fundamentals, the spot market in East China was affected by the large supply of copper yesterday, and spot premiums and discounts fell. This was mainly due to the influx of imported copper that further hit spot premiums and discounts. However, the spot market premiums and discounts in South China rose all the way. This is mainly due to the narrowing of price spread between copper cathode and copper scrap which drove many downstream cable factories to use copper rods produced with copper cathode for production, resulting in many copper rod companies being at full production. Demand is not expected to increase significantly in the near future. In terms of price, suppressed by the strength of the US dollar, copper prices are expected to be difficult to recover in the near future.
Aluminum
Overnight, the most-traded SHFE 2311 aluminum contract opened at 19,050 yuan/mt, with its lowest and highest at 19,010 yuan/mt and 19,080 yuan/mt before closing at 19,030 yuan/mt, down 65 yuan/mt or 0.34% compared with the previous trading day. LME aluminum opened at $2,215/mt on Thursday, with its high and low at $2,228.5/mt and $2,195/mt respectively before closing at $2,201/mt, a decrease of $12.5/mt or 0.56%.
Overall, external macro news disturbed market. The CPI data released yesterday unexpectedly rebounded, and the US dollar index rose sharply. The swinging expectations of short-term interest rate hikes and the intensification of the Palestinian-Israeli conflict added uncertainty to market. The domestic manufacturing PMI data in September rebounded to beyond 50%, further confirming the consumption recovery. Subsequent favorable policies and internal system adjustments are expected to further promote the economy. In terms of fundamentals, the domestic aluminum supply side was approaching its peak, and it is difficult to see a significant increase in the short term. Under various factors, although the domestic social inventory of aluminum accumulated in stages and soared after the holiday, the total volume still remained at a relatively low level over the same period in history. Based on the current survey of domestic aluminum downstream operations, downstream orders turned to gain after the holiday. Driven by the intensive downstream replenishment after the holiday, there were already signs of destocking in mid-week. In the short term, short-term inventory pressure may lift Shanghai aluminum and spot premiums, but in the medium and long term, with the growth rate of the supply side narrowing significantly, the tight supply-demand balance may remain, giving support to SHFE aluminum price and narrowing its downside room.
Lead
SMM Lead Morning Comments
SHANGHAI, Oct 12 (SMM) -
LME lead prices opened at $2090/mt and closed at $2060/mt in overnight trading, down 1.27%.
The most active SHFE 2311 lead contract prices opened at 16300 yuan/mt last evening, and closed at 16230 yuan/mt, a drop of 0.82%, with the high-end of 16310 yuan/mt and the low-end of 16160 yuan/mt.
Zinc
SMM Zinc Morning Comment
LME zinc prices opened at $2473.5/mt last evening and closed down $23/mt or 0.93% at $2442/mt. Trading volume increased to 6521 lots, and open interest decreased by 1323 lots to 220,000 lots. LME zinc inventory shed by 2025 mt to 87025 mt.
The most active SHFE 2311 zinc contract fell to 21115 yuan/mt after opening lower at 21235 yuan/mt, and finally closed at 21125 yuan/mt, down 150 yuan/mt or 0.71%. Trading volume was down to 61566 lots, and open interest grew by 1428 lots to 103,000 lots. The U.S. CPI data unexpectedly rose higher than expected, strengthening the market's expectations for the Federal Reserve to raise interest rates again. The U.S. dollar index rose and returned to above the 106 mark.
Tin
SHFE 2311 tin contract fluctuated downward after the opening of yesterday’s night session. After reaching a relatively low of 212,580 yuan/mt, it rebounded slightly and finally closed at 213,060 yuan/mt, up 0.2%. Spot premiums and discounts were basically unchanged from yesterday. Small brand tin ingots were offered at premiums of 0-400 yuan/mt, premiums of 400-700 yuan/mt for delivery brands, premiums of 1,000-1,200 yuan/mt for Yunxi brands, and discounts of 200-300 yuan/mt for imported tin brands. Tin prices rebounded yesterday, but downstream companies were less willing to purchase. Most trading companies reported that most of the shipments were few yesterday, and there were no transactions as of yesterday’s midday close. Only a few companies were able to sell tin ingots of around 20 mt. Overall, the volume of transactions in spot market yesterday was thin.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 149,950 yuan/mt, and closed at 152,330 yuan/mt, up 1620 yuan/mt compared with the previous trading day. Trading volume rose by 26,587 lots, and open interest decreased by 821 lots. From a macro perspective, yesterday’s US seasonally adjusted CPI annual rate of the end of September was an important macro signal. Current market expectations were lowered by 0.1% from the previous value. In the fundamentals, as nickel prices fluctuated and rose on yesterday’s morning, downstream smelters were less enthusiastic about purchasing, and the actual transaction premiums and discounts in spot market fell compared with the earlier quotes. In summary, it is expected that nickel prices are anticipated to oscillate.