SMM Morning Comment For SHFE Base Metals October 20

SHANGHAI, October 20(SMM) –
Copper
SMM Copper Morning Comment
Data source: SMM
LME copper prices opened at $8020/mt and closed at $8010.5/mt in overnight trading, a drop of 0.39%, with the low-end of $7955/mt and the high-end of $8024/mt. Trading volume was 16,000 lots, and open interest stood at 269,000 lots. The most active SHFE 2311 copper contract prices opened at 66560 yuan/mt and finished at 66730 yuan/mt last evening, up 0.36%, with the low-end of 66410 yuan/mt and the high-end of 66760 yuan/mt. Trading volume was 18,000 lots, and open interest stood at 130,000 lots. On the macro front, Fed Chairman Powell cited unexpected economic growth and rising marginal yields as potential reasons for continued tightening. He also said that the current policy is not too tight and will act with caution. The speech brought the probability of a rate hike in November to 1% in interest rate futures pricing. In terms of fundamentals, premiums and discounts in East China unexpectedly fell yesterday, mainly due to the arrivals of some traders' imported goods, which lowered prices due to strong demand for cash. Inventories in South China have dropped again, and sellers raised prices. Premiums and discounts have risen sharply, so that cargoes were transferred to other places. Demand is still resilient. Upside room for copper prices will be limited amid high US dollar index and unstable market sentiment.
Aluminum
Overnight, the most-traded SHFE 2311 aluminum contract opened at 19,020 yuan/mt, with its lowest and highest at 18,975 yuan/mt and 19,045 yuan/mt before closing at 19,015 yuan/mt, up 40 yuan/mt or 0.21% compared with the previous trading day. LME aluminum opened at $2,193.5/mt on Thursday, with its high and low at $2,195.5/mt and $2,178.5/mt respectively before closing at $2,190.5/mt, an increase of $1.5/mt or 0.07%.
Recently, the swinging expectations of short-term interest rate hikes and the intensification of the Palestinian-Israeli conflict added uncertainty to market. Domestic favorable policies continue to be issued, promoting economic recovery. Although social inventories gradually accumulated after the holiday, the total inventory was still at a historical low for the same period, which had not brought much negative effects on aluminum prices. Aluminum prices may remain high and volatile in the short term, and market players should pay close attention to overseas macro changes.
Lead
SMM Lead morning comments
SHANGHAI, Oct 20 (SMM) -
LME lead opened at $2092.5/mt last evening, and fell due to stock accumulation. The contract finally closed at $2,091.5/mt, an increase of 0.05%.
Overnight, the most active SHFE 2311 lead contract prices opened at 16475 yuan/mt. Boosted by the reduction in lead warrants inventory by nearly 20,000 mt, SHFE lead reached a maximum of 16560 yuan/mt. The contract closed at 16500 yuan/mt, an increase of 0.43%. Open interest stood at 63568 lots, a decrease of 2560 lots from the previous trading day.
Zinc
SMM Zinc Morning Comment
Data source: SMM
Overnight, LME zinc opened at $2433.5/mt, hitting a low of $2407.5/mt, and closed at $2430/mt, down $4/mt or 0.16%. Trading volume decreased to 5162 lots, and open interest fell 4051 lots to 208,000 lots. LME zinc inventories decreased by 1550 mt to 78775 mt, a drop of 1.93%. Overnight, U.S. interest rates are expected to remain unchanged in November, but there are concerns about the resurgence of inflation. At the same time, existing home sales have dropped to a 13-year low.
The most active SHFE 2311 prices opened at 21030 yuan/mt and lost 80 yuan/mt or 0.38% to settle at 21040 yuan/mt in overnight trading with the high-end of 21100 yuan/mt and the low-end of 21000 yuan/mt. Trading volumes decreased to 45666 lots and open interest fell 1898 lots to 74531 lots.
Tin
SHFE 2311 tin contract rebounded slowly after opening low at yesterday night session. After reaching a high of 217,430 yuan/mt, it fell back and maintained sideways basically, finally closing at 216,650 yuan/mt, down 0.73%.
Spot premiums and discounts were basically unchanged from yesterday. Small brand tin ingots were offered at premiums of 0-300 yuan/mt, premiums of 400-700 yuan/mt for delivery brands, premiums of 900-1,200 yuan/mt for Yunxi brands, and discounts of 300-600 yuan/mt for imported tin brands. The overall tin price maintained high fluctuations yesterday, but downstream companies were less willing to purchase. Most trading companies reported that most of the shipments were few yesterday. The transaction volume remained flat.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 150,250 yuan/mt, and closed at 148,920 yuan/mt, down 610 yuan/mt. Trading volume rose by 15,386 lots, and open interest increased by 1,409 lots.
On the macro front, raising interest rates was on the way, and market was still controversial about whether to it will happen later this year. Currently, prices of US dollar and gold continued to move upward, and commodities were under downward pressure. In the fundamentals, the demand for domestic electrowinning nickel remained stable and the purchase amount of Jinchuan nickel plate was acceptable. Norilsk nickel transactions in spot market were sluggish and demand dropped. In summary, it is expected that nickel prices will continue to decline slightly in the future.