LME and SHFE base metals closed mixed. On the macro front, the market once again paid attention to the adjustment of China's pandemic control measures. In the long run, Chinese COVID-19 control policy will definitely be relaxed in order to improve the demand, which, however, will encounter various difficulties in the near term.
Copper: LME copper opened at $8,074/mt on Tuesday and dropped to a low of $8,009/mt after climbing to $8,083.5/mt. At last, the contract closed at $8,044/mt, up 0.8%. The trading volume was 15,000 lots, and open interest stood at 244,000 lots.
SHFE 2301 copper opened at 65,080 yuan/mt overnight and once hit the highest and lowest of 65,200 yuan/mt and 64,630 yuan/mt respectively. At last, it closed at 64,650 yuan/mt, down 0.26%. The trading volume was 58,000 lots, and open interest stood at 139,000 lots.
On the macro front, the US dollar rose by 0.12% overnight. At present, the market focuses on the speech of the US Fed Chairman Powell and the upcoming November employment data on Friday. On the fundamentals, Las Bambas cut its capacity to 30% of the normal earlier this month due to the protests. However, SMM believes that despite the news of many intermittent strikes, it is still difficult to reverse the oversupply of copper in the future.
On the demand side, the market once again paid attention to the adjustment of China's pandemic control measures. In the long run, Chinese COVID-19 control policy will definitely be relaxed in order to improve the demand. However, in the short term, especially before the upcoming Lunar New Year, it will be difficult for the market to see a significant boost on consumption. Instead, some small factories have holidays ahead of schedule.
Copper prices fluctuated and fell overnight. As the market has already digested the positive expectations of real estate, the market shall keep an eye on the US non-farm data that is going to be released on Friday and relevant officials’ statements on the Fed’s rate hike in the future. Therefore, SMM believes that copper prices will remain rangebound in the short term and may not experience intermittent ups or downs.
Aluminium: The most-traded SHFE 2301 aluminium contract opened at 18,920 yuan/mt overnight and rose to 19,000 yuan/mt before closing at 18,905 yuan/mt, down 125 yuan/mt or 0.66%.
LME aluminium opened at $2,371/mt on Tuesday and closed at $2,381.5/mt, an increase of $7.5/mt or 0.32%.
On the supply side, the domestic operating capacity increased slightly. On the demand side, domestic aluminium processing companies reported insufficient orders amid global economic recession. However, the relaxation of pandemic controls somehow restored market confidence. Given the tug-of-war between longs and shorts, the short-term aluminium prices may still move rangebound.
Lead: LME 3M lead contact rose after opening and hovered sideways during the session, but fell slightly before closing.
SHFE 2301 lead contract opened at 15,720 yuan/mt last night and fell slowly after rising. SHFE 2301 lead contract closed at 15,730 yuan/mt, up 0.61%.
In terms of the inventory, the SHFE warrant inventory in Zhejiang Tianchuan declined 5,008 mt compared with yesterday. The SHFE warrant inventory totalled at 36,121 mt. The LME lead inventory dropped 4,275 mt last week and further declined 1,000 mt to 24,350 this Monday, which was a new low in recent days. It is expected that the subsequent SHFE lead prices will remain high and fluctuate sideways.
Zinc: LME 3M fell after surging high, and closed the session in the negative zone. Overnight LME zinc inventory fell 25 mt to 41,425 mt. SHFE zinc hovered around the daily moving average in the night session, and gained support at the 5 and 10-day moving average.
On the supply side, some smelters in Yunnan saw relatively tight supply of raw materials due to transportation restrictions, with the production hindered to some extent. But the overall impact was insignificant. On the demand side, rising zinc prices contained downstream demand, and the cargo holders tried to lower the premiums to boost the sales. But the transactions were still limited. On the whole, the supporting real estate policies offered constant support to zinc prices, and SHFE zinc is expected to remain rangebound in the near future.
Tin: Overnight, SHFE tin moved up and closed at around 186,000 yuan/mt. The open interest of the most-traded and front-month SHFE tin contracts both declined. The domestic tin inventory under warrants changed little. Premiums and discounts in the spot market were largely stable. LME tin inventory increased slightly, but the growth slowed down. Overseas premiums rose again. The import window remained closed. It will be difficult for tin prices to continue to rise due to poor demand and cautious sentiment.
Nickel: On the supply side, affected by the difference between domestic and overseas nickel prices, SHFE/LME nickel price ratio stood at around 7.6. However, spot imports of pure nickel still suffered huge losses. Recently, the imported pure nickel in the market has decreased, and the premiums have rebounded. NPI demand from the steel mills was poor, resulting in a slight accumulation of the in-plant inventories in NPI factories. And the NPI plants got high costs as they used the high-priced nickel ore. On the demand side, some steel mills have announced in advance their plans to suspend production and maintenance from December 2022 to January 2023. Stainless steel output will decrease. The rigid demand for pure nickel from military alloy companies still existed, but the demand from the civil alloy sector remained poor. To sum up, the supply of pure nickel was tight, and the downstream demand was poor. Besides, Indonesia's export tariff has not taken effect. Nickel prices will remain rangebound.