SMM Evening Comments (Nov 11): Shanghai Nonferrous Metals Closed All with Gains amid Booming Market Sentiment

SHANGHAI, Nov 11 (SMM) – Shanghai nonferrous metals closed all with gains as the macro sentiment picked up palpably following the October US CPI disclosed overnight which grew more slowly than expected, and amid expectations that Chinese pandemic control will relax to some extent.

Shanghai copper gained 1.49%, aluminium added 1.11%, lead jumped 1.46%, zinc advanced 1.38%, tin climbed 7.42%, and nickel rose 4.06%.

Copper: The most-traded SHFE 2212 copper closed up 1.49% or 990 yuan/mt at 67,630 yuan/mt, with open interest down 2,165 lots to 197,589 lots.

The October US CPI disclosed overnight fell unexpectedly, alluding peaking inflation. The market ramped up the expectations for slowing rate hikes, pulling back the US dollar index. As such, the commodity prices rose, including copper.

In the spot market, the downstream players stood on the sidelines with strong SHFE copper, and the traders were cautious for risk aversion. SHFE 2211 and 2212 spread remained at 760 yuan/mt, which kept the traders wait-and-see as well. The discounts of mainstream standard-quality copper stood at 70-60 yuan/mt, and good-quality copper at 50 yuan/mt.

Aluminium: The most-traded SHFE 2212 aluminium closed up 1.11% or 205 yuan/mt at 18,755 yuan/mt, with open interest up 12,434 lots to 177,573 lots.

On the supply side, the operating capacity in Sichuan province has been slightly restored, but is unlikely to fully recover by the end of the year due to tight hydropower supply in the dry season. The resumption of idled capacity in Guangxi province was slow, and the release of new capacity in Guizhou and Inner Mongolia fell short of expectations. On the demand side, domestic aluminium downstream consumption is still weak. Operating rates of aluminium plate/sheet, strip, foil and extrusion enterprises have started to decline due to the pandemic and insufficient orders. However, domestic aluminium inventories have repeatedly hit new lows due to limited arrivals. It is expected that SHFE aluminium will stay firm in the short term.

Lead: The most-traded SHFE 2212 lead closed up 1.46% or 225 yuan/mt at 15,680 yuan/mt, with open interest up 682 lots to 60,035 lots.

SHFE lead refreshed the new high with strong LME lead, and the spread between spot and futures price expanded further. The cargo holders preferred to deliver their goods to delivery warehouse. The downstream players purchased on demand approaching the weekend, and the transactions were mainly in the form of long-term orders, with few trades in the spot market. The market players were strongly wait-and-see.

Zinc: The most-traded SHFE 2212 zinc closed up 1.38% or 325 yuan/mt at 23,905 yuan/mt, with open interest up 1,483 lots to 96,353 lots.

The market sentiment was boosted by improving macro data as well as easing pandemic control in China. SHFE zinc rose as a result.

Tin: The most-traded SHFE 2212 tin closed up 7.42% or 12,500 yuan/mt at 181,050 yuan/mt, with open interest down 189 lots to 33,795 lots.

In the spot market, the smelters were cautious in making quotes in early trade, and spot premiums quoted by mainstream smelters fell. The spot premiums offered by the traders were low, and some were even sold with discounts. The market transactions were poor, but the traders ramped up their purchases. Downstream players, on the other hand, purchased on rigid demand.

Nickel: The most-traded SHFE 2212 nickel closed up 4.06% or 8,050 yuan/mt at 206,280 yuan/mt, with open interest down 4,129 lots to 89,613 lots.

In the spot market, Jinchuan nickel was in premiums of 3,300-3,800 yuan/mt, with an average of 3,550 yuan/mt, down 800 yuan/mt on a daily basis. The premiums of NORNICKEL nickel stood at 1,800-2,400 yuan/mt, with an average of 2,100 yuan/mt, down 750 yuan/mt on a daily basis. SHFE nickel rose again overnight following the disclosure of US CPI, and the absolute spot prices of pure nickel initiated a surge of nearly 7,000 yuan/mt, but there were few transactions. For nickel briquette, the prices stood at 206,600-207,600 yuan/mt, up 7,300 yuan/mt from the previous trading day.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]