SMM Morning Comment For SHFE Base Metals November 2

SHANGHAI, Nov 2 (SMM) -

Copper

Copper prices strengthen as Fed pauses interest rate hike as expected
LME copper prices opened at $8106/mt and closed at $8108/mt in overnight trading, a drop of 0.14%, with the low-end of $8088/mt and the high-end of $8186.5/mt. Trading volume was 18,000 lots, and open interest stood at 262,000 lots. The most active SHFE 2312 copper contract prices opened at 67330 yuan/mt and finished at 67350 yuan/mt overnight, up 0.13%, with the low-end of 67700 yuan/mt and the high-end of 67310 yuan/mt. Trading volume was 30,000 lots and open interest stood at 153,000 lots. On the macro front, the Federal Reserve kept interest rates unchanged. In its statement, it paid more attention to the tightening of "financial conditions" and emphasized that inflation has two-way risks. U.S. Q3 economic activity expanded at a strong rate. Powell said that the Fed is nearing the end of raising interest rates and is acting cautiously and considering whether it must raise interest rates again and is not considering cutting interest rates. In terms of fundamentals, some imported copper flowed into the domestic spot market yesterday, lowering spot premiums and discounts. However, the supply of mainstream copper was not ample. Inventories in South China have declined due to the small arrival of goods, and stocks have remained stable. Sellers raised prices, but downstream buyers maintained on-demand purchases. Spot premiums and discounts moved upward, and actual transactions were not active. In terms of consumption, copper prices have fluctuated rangebound, and the market's wait-and-see sentiment has intensified. In terms of prices, the Federal Reserve has suspended its hawkishness, and there is room for slight recovery in copper prices.

Aluminium

Overnight, the most-traded SHFE 2312 aluminum contract opened at 19265 yuan/mt, with its low and high at 19190 yuan/mt and 19265 yuan/mt before closing at 19205 yuan/mt, down 30 yuan/mt or 0.16%. LME aluminum opened at $2246/mt on Wednesday, with its low and high at $2233.5/mt and $2257/mt respectively before closing at $2242.5/mt, down 0.16%.

There is still great uncertainty in overseas macro front. 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 has announced to issue an additional one trillion yuan of local government bonds, which could boost the economy and market. In terms of fundamentals, some aluminum billet factories have recently reduced production, the industry's ingot casting volume has increased month-on-month. There are expectations for production reduction by aluminium smelters in Yunnan. The domestic aluminum supply will remain high in short-term. And imported ingots continue to enter China. Downstream consumption is switching from peak season to off-season. Destocking of aluminum ingot social inventory is not smooth. In the short term, aluminum prices may remain rangebound. We need to pay attention to domestic aluminum inventories and downstream consumption in the future.

Lead

SMM Lead Morning Comment
SHANGHAI, Nov 2 (SMM) -
LME lead open at $2085.5/mt and stabilised during the Asian trading hours. It fell to $2075.5/mt during the European trading hours, and finally rose and closed at $2109.5/mt, up 1.35%.
The most active SHFE 2312 lead contract prices opened at 16285 yuan/mt last evening, and closed at 16355 yuan/mt, an increase of 0.43%, with the high-end of 16360 yuan/mt and the low-end of 16260 yuan/mt.

Zinc

SMM Zinc Morning Comment
Overnight, LME zinc opened at US$2,425/ton. During the European trading period, LME zinc fluctuated around the daily moving average, and reached a low of US$2,400.5/ton before touching a high of US$2,598.5/ton. The contract finally closed up at US$2,497/ton, up US$79.5/ton, or 3.29%. The trading volume increased by 9,052 lots to 16,201 lots, and the open interest decreased by 206 lots to 198,000 lots. LME inventory fell by 1,825 tons to 82,700 tons, a decrease of 2.16%. Nyrstar announced the closure of the operations of two US zinc mines, driving LME zinc to rapidly rise.
Overnight, the most-traded SHFE 2312 zinc contract opened at 21200 yuan/mt and rose to 21615 yuan/mt before closing at 21505 yuan/mt, up 525 yuan/mt or 2.5%. Trading volume increased 49215 to 179,000 lots, and open interest increased by 9821 lots to 91,800 lots.

Tin
SHFE 2312 tin contract fell to 203900 yuan/mt overnight and then rebounded to 206860 yuan/mt, closing at 205830 yuan/mt, down 0.16%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands did not change much. Small brand tin ingots were offered at premiums of 200-600 yuan/mt, versus premiums of 400-700 yuan/mt for delivery brands, premiums of 1,000-1,200 yuan/mt for Yunxi brand, and discounts of 500 yuan/mt for imported brand tin ingots. Tin prices fell deeply yesterday, driving the purchasing sentiment of downstream companies to pick up. Smelters held offers firm. Spot supply looks likely to tighten.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 143470 yuan/mt, and closed at 140640 yuan/mt, down 2890 yuan/mt. Trading volume rose 25309 lots, and open interest increased 8859 lots. The US Federal Reserve held interest rates steady at the conclusion of its policy meeting. From a fundamentals perspective, the trend of pure nickel inventory accumulation remains unchanged, and downstream demand has not yet improved. Yesterday’s spot market transactions were still weak. Nickel price is expected to be move rangebound.