SMM Morning Comment For SHFE Base Metals November 1

LME copper prices opened at $8130/mt and closed at $8119/mt in overnight trading, a drop of 0.24%, with the low-end of $8080/mt and the high-end of $8159/mt. Trading volume was 16,000 lots, and open interest stood at 269,000 lots. The most active SHFE 2312 copper contract prices opened at 67330 yuan/mt and closed at 67330 yuan/mt last evening, down 0.15%, with the high-end of 67430 yuan/mt and the low-end of 67150 yuan/mt. Trading volumes stood at 22,000 lots and open interest stood at 155,000 lots. On the macro front, the U.S. labor cost index in the third quarter recorded 1.1%, higher than expected and the previous value (1.00%), indicating that U.S. employment costs unexpectedly accelerated in the third quarter, exacerbating the market's concern that a strong labor market may increase inflation rate to above target. In addition, the Conference Board's consumer confidence index fell for three consecutive months. In terms of fundamentals, spot resources in East China are still not abundant. Spot premiums and discounts continued to rise yesterday. However, due to the surge in market prices, downstream purchases were as needed. Inventories in South China increased slightly yesterday, mainly due to the relatively high price of copper and weaker downstream procurement demand. But sellers were not willing to lower premiums and discounts. In terms of consumption, copper prices rose, but spot resources were not sufficient. It is expected that most companies will maintain on-demand purchases. The copper prices will meet resistance from expectations of high US dollar.

Aluminum

SMM Aluminum Morning Comment

The most-traded SHFE 2312 aluminum contract opened at 19215 yuan/mt in last night trading session, with the lowest and highest at 19130 yuan/mt and 19225 yuan/mt before closing at 19165 yuan/mt, down 50 yuan/mt, or 0.26%. Three-month LME aluminum opened at $2261.5/mt last evening and closed at $2246/mt, a decline of $17.5/mt or 0.77%.

There is still great uncertainty in overseas macroeconomics. U.S. economic data shows that the U.S. economy is resilient. The U.S. dollar index fluctuates at a high level, suppressing commodities. China will issue an additional one trillion yuan of local government bonds to boost the economic market. In terms of fundamentals, some aluminum billet factories have recently reduced production, and ingot casting volume has increased month-on-month. Yunnan's production reduction expectations are basically confirmed, the short-term domestic aluminum supply side mainly remain at high levels, and the imports did not decrease. Downstream consumption is weakening, and social inventory destocking of aluminum ingots is not smooth. The inventory is still at a high level since half a year. In the short term, aluminum prices may remain rangebound. We will pay attention to domestic aluminum inventories and downstream consumption in the future.

Lead

SMM Lead Morning Comment

SHANGHAI, Nov 1 (SMM) -

LME lead opened at $2116.5/mt and stabilized during the Asian trading hours. During the European trading hours, LME lead briefly hit the highest point at $2120/mt and the lowest of $2028/mt, closing down 1.54% at $2081.5/mt overnight.

The most traded SHFE 2312 lead contract opened at 16290 yuan/mt and fell 0.28% to 16250 yuan/mt, after briefly hitting the highest point at 16380 yuan/mt and the lowest point at 16230 yuan/mt.

Zinc

SMM Zinc Morning Comment

Overnight, LME zinc opened at $2,463/mt. During the European trading session, LME zinc moved up and reached a high of $2,471/mt. In the night session, LME zinc tested as low as $2,417/mt. It finally closed down at $2,417.5/mt, down $49/mt, or 1.99%. The trading volume increased by 1,181 lots to 7,149 lots. Open interest decreased by 1,917 lots to 198,000 lots. LME zinc inventories increased by 2,926 tons to 84,525 tons, an increase of 3.58%. The CPI in the Eurozone in October was lower than expected and recorded 0.1. European inflation data cooled down and GDP shrank month-on-month.

Overnight, the most-traded SHFE 2312 zinc contract opened at 21085 yuan/mt and fell to 20960 yuan/mt before closing at 20975 yuan/mt, down 185 yuan/mt or 0.87%. Trading volume decreased 79493 to 57,800 lots, and open interest increased by 3354 lots to 83,000 lots.

Tin

SMM Tin Morning Comment

The price of the most active SHFE 2312 tin contract fell rapidly after opening in overnight trading session, reaching a low of 205600 yuan/mt. The prices then fluctuated rangebound and finally closed at 206120 yuan/mt last evening, a decline of 3.23%.

Nickel

SMM Nickel Morning Comment

On October 31 evening, the most active SHFE nickel contract prices opened at 147300 yuan/mt and closed at 143580 yuan/mt, a decrease of 2890 yuan/mt from the closing price of the previous trading day. The trading volume increased by 64788 lots, and the open interest increased by 12735 lots. The decrease in trading volume shows that longs were more rational in closing positions. Therefore, the prices dropped moderately, and the probability of a sustained decline is high. On the macro front, the current market expectations for an interest rate hike in November continue to cool down, and the U.S. dollar index has remained high recently. The market needs to pay attention to the Federal Reserve interest rate decision this Thursday. From a fundamental perspective, the trend of pure nickel inventory accumulation remains unchanged, downstream demand has not yet improved, and spot market transactions were still weak. In summary, it is expected that the nickel price may fluctuate rangebound in the near term.