SMM Morning Comment For SHFE Base Metals November 24

SHANGHAI, November 24(SMM) –
Copper
LME copper prices opened at $8416.5/mt and closed at $8397/mt in overnight trading, a gain of 0.24%, with the low-end of $8389/mt and the high-end of $8423.5/mt. Trading volume was 10,000 lots, and open interest stood at 264,000 lots. The most active SHFE 2401 copper contract prices opened at 67900 yuan/mt and finished at 68020 yuan/mt last evening, up 0.4%, with the low-end of 67830 yuan/mt and the high-end of 68100 yuan/mt. Trading volume was 21,000 lots, and open interest stood at 156,000 lots. On the macro front, the preliminary manufacturing PMI value of the Eurozone in November was recorded at 43.8, a six-month high. Germany's preliminary manufacturing PMI value in November was recorded at 42.3, a six-month high. The minutes of the ECB meeting stated that members advocated leaving the door open for possible further interest rate increases, but further interest rate increases are not part of the current baseline expectations. In terms of fundamentals, yesterday's rise in premiums and discounts in East China was mainly due to the continuous restarting of furnaces by surrounding processing companies. This, coupled with the drop in intraday copper prices, boosted procurement. However, the supply of goods from the north to the south suppressed premiums and discounts; South China's inventory has been suppressed for three consecutive days. The decline is mainly due to the low arrival of goods. Both copper prices and inventories fell yesterday. However, downstream faced high premiums and shut down furnaces. The sellers lowered the premiums, but the overall price was still at a high level. In terms of consumption, spot quotes in East China decreased and demand will grow. Copper prices are expected to remain rangebound.
Aluminum
The most-traded SHFE 2312 aluminum contract opened at 18825 yuan/mt overnight, with its low and high at 18750 yuan/mt and 18825 yuan/mt before closing at 18810 yuan/mt, up 25 yuan/mt or 0.13%. LME aluminum opened at $2223/mt in the previous trading day, with its low and high at $2215/mt and $2233/mt respectively before closing at $2222/mt, up $0.5/mt or 0.02%.
On the macro level, expectations for further interest rate hikes in Europe and the US have cooled, and China continues to promote economic recovery. In terms of fundamentals, Yunnan's production reduction coincides with the arrival of the off-season, and both supply and demand are reduced. The reduction on the demand side still needs to be observed. In the short term, with the support of falling aluminum ingot stocks and real estate support policies, SHFE aluminum may move sideways.
Lead
LME lead opened at $2219.5/mt and stabilized during the Asian trading hours yesterday. During the European trading hours, LME lead briefly hit the highest point at $2236/mt and closed flat at $2211/mt.
The most active SHFE 2401 lead contract prices opened at 16530 yuan/mt last evening, and closed at 16495 yuan/mt, a drop of 0.36%, with the high-end of 16560 yuan/mt and the low-end of 16475 yuan/mt. Open interest decreased by 531 lots from the previous trading day to 80094 lots, and trading volumes fell 63858 lots to 20020 lots.
Zinc
Overnight, LME zinc prices opened at $2499/mt, and closed at $2543/mt, up $44/mt or 1.76%. Trading volume decreased to 6355 lots, and open interest grew 1541 to 204,000 lots. LME zinc inventory increased by 900 mt to 211750 mt, an increase of 0.43%. The weak performance of the U.S. dollar index overnight provided support to LME Zinc, but business activities in the euro zone fell again in November, exacerbating concerns about economic recession.
The most-traded SHFE 2401 zinc contract opened at 20935 yuan/mt overnight and touched a high of 21060 yuan/mt before and closing at 21040 yuan/mt, up 135 yuan/mt or 0.65%. Trading volume reduced to 54720 lots, and open interest gained by 352 lots to 93984 lots. It is reported that for the first time in China, banks are allowed to provide unsecured working capital loans to real estate companies to increase the risk resistance of real estate; at the same time, after environmental protection and production restrictions are over, companies resume normal production.
Tin
SHFE 2312 tin contract fell 201510 yuan/mt overnight and then rebounded to 203590 yuan/mt, closing at 202810 yuan/mt, down 0.69%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as follows: Small brand tin ingots were offered at premiums of 0-300 yuan/mt over SHFE 2312 tin contract, versus premiums of 400-700 yuan/mt for delivery brands, premiums of 900-1100 yuan/mt for Yunxi brand, and discounts of 300-600 yuan/mt imported brand tin ingots. Tin price remained at a relatively low level yesterday. Downstream companies were not very enthusiastic about purchasing and generally restocked as needed.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 129730 yuan/mt, and closed at 127720 yuan/mt, down 1690 yuan/mt. Trading volume fell by 3872 lots, and open interest decreased by 9590 lots. The current nickel price is not very sensitive to macro sentiment, and is mainly subject to fundamentals of refined nickel instead. The current pure nickel oversupply persists. Supply continues to increase, and there is no plan to reduce production for the time being. Although downstream demand has improved during the week, overall demand is still weak. Nickel price is expected to move rangebound and then decline.