SMM Morning Comment For SHFE Base Metals On October 24

SHANGHAI, October 24 (SMM) –

Copper

LME copper opened overnight at $9,524/mt, initially declined to a low of $9,460.5/mt, then rebounded to a high of $9,544/mt during the session, and finally fluctuated widely to close at $9,503/mt, with open interest reaching 278,000 lots. The most-traded SHFE copper 2412 contract opened overnight at 76,230 yuan/mt, initially dipped to 76,100 yuan/mt, then fluctuated upward to a high of 76,590 yuan/mt, and finally closed at 76,500 yuan/mt, down 0.56%, with trading volume reaching 36,000 lots and open interest reaching 156,000 lots. Macro side, the US Fed's Beige Book showed that since early September, economic activity in almost all regions has remained largely unchanged, with manufacturing activity declining in most regions. The US dollar index slightly declined but remained strong. Sources indicated that the European Central Bank (ECB) has begun discussing whether interest rates need to be lowered below neutral levels, and an ECB governor stated that a 50 basis point interest rate cut could be considered at the next meeting. Fundamentals side, warehouse warrants continued to flow out, premiums remained generally stable with no significant increase, traders' activity was low, and consumption remained under pressure, resulting in overall weak supply and demand. In summary, with both supply and demand weak and the US dollar index remaining strong, copper prices are expected to fluctuate downward today.

Aluminum

Futures: Overnight, the most-traded SHFE aluminum 2412 contract opened at 20,855 yuan/mt, reaching a high of 21,170 yuan/mt and a low of 20,830 yuan/mt, closing at 20,920 yuan/mt, up 5 yuan/mt or 0.02% from the previous close. On Wednesday, LME aluminum opened at $2,632.5/mt, hitting a high of $2,684/mt and a low of $2,626/mt, closing at $2,656.5/mt, up $19.5/mt or 0.74%.

Summary: Macro front, domestic policies continue to boost the economy, and global market liquidity is abundant. Fundamentals side, the bauxite supply crisis has driven alumina prices to high levels, significantly increasing costs in the aluminum industry. Overall, in the short term, the supply-demand mismatch in the aluminum market is not prominent, but uncertainties on the macro front and cost side may support aluminum prices to fluctuate upward.

Lead

Overnight, LME lead opened at $2,080/mt. The US dollar index continued to rise, suppressing non-ferrous metals. LME lead moved downwards after a higher opening, especially during the European session, quickly falling to around $2,055/mt and finally closing at $2,055/mt, up 1.11%.

Overnight, SHFE lead warehouse warrant inventory continued its slight decline. The most-traded SHFE lead 2411 contract opened at 16,690 yuan/mt. After the opening, SHFE lead fluctuated upward, reaching around 16,800 yuan/mt. However, the momentum of the bulls was insufficient, and in the latter part of the trading session, SHFE lead gave back its gains, finally closing at 16,745 yuan/mt, down 0.15%. Its open interest was 26,376 lots, a decrease of 2,507 lots from the previous trading day.

Macro side, the Chinese President attended the 16th BRICS Summit and delivered an important speech. The Ministry of Industry and Information Technology (MIIT) made the latest statements on automobile consumption, artificial intelligence, low-altitude economy, and commercial spaceflight. It mentioned that the automotive industry still faces challenges such as insufficient domestic effective demand and increasing uncertainties and instabilities in overseas exports. The next step will be to take multiple measures to expand automobile consumption and optimize automobile production access management policies.

Fundamentals side, in October, lead ingot showed a dual increase in supply and demand, with fundamental news being mediocre, and lead prices remained in a consolidation phase. On one hand, the issue of tight raw material supply still exists, such as strong cost support from battery scrap. At the same time, lead concentrates need to be stockpiled for winter, and unexpected shutdowns of lead-zinc mines domestically and abroad have occurred, making it difficult for smelters to negotiate TCs. On the other hand, lead consumption seasonally improved, but the consumption recovery was limited, making it difficult for lead ingots to be destocked in large quantities in the short term.

Zinc

Overnight, LME zinc opened at $3,142/mt. At the beginning of the session, LME zinc briefly fell along the daily moving average, then quickly surged to a high of $3,168/mt due to long positions entering and short positions closing. During European trading hours, LME zinc plunged to a low of $3,103/mt as longs exited, then recorded a V-shaped reversal, fluctuating near the daily moving average. It slightly rose at the end of the session, closing at $3,146/mt, an increase of $3.5/mt or 0.11%. Trading volume increased to 14,714 lots, and open interest increased by 1,737 lots to 256,000 lots. Overnight, LME zinc recorded a small bullish candlestick, with various moving averages providing support below and the MACD bearish column narrowing. Overnight, LME inventory decreased by 2,475 mt to 232,150 mt, a decline of 1.05%, continuing the reduction trend. Recently, LME cash-to-3M contango/backwardation rose above 50, increasing capital concentration, and LME zinc's focus shifted upward.

Overnight, the most-traded SHFE zinc 2412 contract opened at 24,900 yuan/mt. At the beginning of the session, SHFE zinc briefly consolidated around the daily moving average, and then long positions increased, pushing SHFE zinc to fluctuate upward, operating above the daily moving average, with the focus shifting to 25,100 yuan/mt and peaking at 25,150 yuan/mt. Overnight, SHFE zinc recorded a bullish candlestick, with the KDJ indicator expanding upward. The zinc supply remains tight, but recently, galvanizing operating rates in the north have been weak due to environmental protection-driven production restrictions, and consumption transmission is not smooth. Zinc prices still face resistance above, with short-term fluctuations being the main trend.

Tin

Yesterday, the most-traded SHFE tin contract closed at 253,690 yuan/mt, up 330 yuan/mt, an increase of 0.13%, with a high of 255,280 yuan/mt and a low of 252,700 yuan/mt.

During yesterday's morning session, trading companies' quotations for various domestic tin ingot brands showed little change compared to recent days. Small brand tin ingot was quoted at a premium of 0-200 yuan/mt against the SHFE 2411 contract, delivery brand at a premium of 200-600 yuan/mt against the SHFE 2411 contract, Yunnan tin brand at a premium of 600-800 yuan/mt against the SHFE 2411 contract, and imported tin brand at a discount of 700 yuan/mt against the SHFE 2411 contract. Yesterday, tin prices fluctuated rangebound, and most downstream companies adopted a wait-and-see attitude. Most trading companies had sporadic transactions, with a few trading companies transacting around one truckload. Overall, the spot market transactions were relatively sluggish yesterday.

Nickel

On October 23, Jinchuan nickel was quoted at a premium of 1,500-1,700 yuan/mt, with an average of 1,600 yuan/mt, down 50 yuan/mt from the previous trading day. Norilsk nickel was quoted at a discount of 200-100 yuan/mt, with an average of 150 yuan/mt, up 50 yuan/mt from the previous trading day. On the morning of October 23, the futures market fluctuated, and there was no significant change in the spot premium compared to the previous working day. Nickel briquette prices were 126,100-126,500 yuan/mt (out of stock), down 100 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 482 yuan/mt (nickel sulphate prices were 482 yuan/mt lower than nickel briquette prices).