1.Copper Inventory in Major Chinese Markets Dips 6,300 mt over Weekend

 As of Monday November 21, SMM copper inventory across major Chinese markets stood at 121,700 mt, down 6,300 mt from last Friday, but up 45,200 mt from the same period last year when the data was 76,500 mt. Over the weekend, inventories in major regions such as Shanghai and Jiangsu dropped, mainly due to the outflow of warrants for the delivery of the SHFE 2211 copper, while inventories in other regions rose slightly. In detail, the inventory in Shanghai dipped 6,900 mt to 83,900 mt, the inventory in Guangdong rose 900 mt to 7,400 mt, the inventory in Jiangsu fell 500 mt to 24,600 mt, the inventory in Chengdu grew 100 mt to 500 mt, the inventory in Tianjin increased 200 mt to 4,200 mt, while the inventories in other regions remained unchanged.

The inventory in Shanghai decreased over the weekend owing to the delivery of the SHFE 2211 copper last Tuesday, the outflow of a large number of warrants since last Friday and better consumption amid the dropping copper prices.  The higher inventory in Guangdong was caused by the increased arrivals of domestic copper and poor consumption. The outflow of some warrants contributed to the decrease in inventory in Jiangsu.

Looking forward, warrants will flow into the market this week, and the downstream purchases will be stimulated by the continuous decline in copper prices. Spot trading would pick up if copper prices kept dropping. The inventory this week will fall slightly as the long-term orders are going to be delivered.

 

 

 

2. Base Metals Closed with Losses on Continuously Rising US Dollar

LME and SHFE base metals closed with losses overnight. On the macro front, due to the COVID-19 and concerns about the global economy, the US dollar index rebounded overnight and closed up 0.79%, which was bearish for metal prices.

LME copper fell 1.75%, aluminium slid 1.45%, lead lost 2.29%, and zinc shed 3.52%.

SHFE copper fell 1.31%, aluminium slid 0.68%, lead lost 0.13%, and zinc shed 2.27%.

Copper: LME copper opened at $7,944.5/mt on Monday and dropped to a low of $7,858/mt after climbing to $7,970.5/mt. At last, the contract closed at $7,895/mt, down 1.75%. Trading volume was 16,000 lots, and open interest stood at 245,000 lots.

SHFE 2212 copper opened at 64,640 yuan/mt overnight and trended lower after hitting a high of 64,800 yuan/mt. At last, the contract fell to 64,260 yuan/mt, down 1.31%. Trading volume was 34,000 lots, and open interest stood at 128,000 lots.

On the macro front, due to the COVID-19 and concerns about the global economy, the US dollar index rebounded overnight and closed up 0.79%, which was bearish for copper prices.

In terms of fundamentals, affected by the outflow of warrants and the slight pick-up in downstream demand after the copper prices fell, SMM copper inventory across major Chinese markets stood at 121,700 mt as of Monday November 21, down 6,300 mt from last Friday, but up 45,200 mt from the same period last year when the data was 76,500 mt. LME inventory increased by another 1,500 mt yesterday, and the proportion of registered warrants rose while that of cancelled warrants continued to fall. In the terms of consumption, the decline in copper prices boosted downstream purchases on rigid demand, but the terminal consumption did not improve. Short-term copper prices will fluctuate with some downward potential as the bullish macro factors have paid off.

Aluminium: The most-traded SHFE 2212 aluminium contract opened at 18,900 yuan/mt overnight and rose to 18,990 yuan/mt before closing at 18,870 yuan/mt, down 130 yuan/mt or 0.68%.

LME aluminium opened at $2,406/mt on Monday and closed at $2,380/mt, a drop of $35/mt or 1.45%.

The production resumption process in Sichuan and Guangxi progressed steadily, while curtailment was carried out in other places, hence the overall operating aluminium capacity now stands at 40.45 million mt. On the demand side, SMM aluminium ingot social inventory fell again, but the consumption was till on rigid demand. In the short term, aluminium prices are likely to move rangebound amid rising supply and modest consumption.

Lead: Overnight, LME lead opened at $2,156/mt, and fell slightly during the Asian trading hours. During the European trading hours, LME lead hit the lowest point at $2,097.5/mt, and finally closed at $2,109/mt, down 2.29%. The open interest decreased 74 lots to 101,000 lots compared with the previous trading day.

The most-trade SHFE 2301 lead contract opened at 15,655 yuan/mt, and hit the lowest point at 15,615 yuan/mt at the beginning of the session, then rebounded to 15,815 yuan/mt as the number of long positions increased. The most-trade SHFE 2301 lead contract finally closed at 15,720 yuan/mt, down 0.13%. The open interest increased 4,338 lots to 90,291 lots compared with the previous trading day.

Zinc: LME zinc closed at $2,916/mt on Monday, down $106.5/mt or 3.52%. The open interest fell 383 lots to 203,000 lots. Overnight LME inventory lost 275 mt to 42,425 mt.

The most traded SHFE 2212 zinc contract closed at 23,655 yuan/mt overnight, down 675 yuan/mt or 2.27%. The open interest fell 6,352 lots to some 74,000 lots. On the consumption side, the boost enabled by loosening pandemic controls in China is worth attention as the confirmed covid cases have been rising recently, which is likely to shadow the short-term market outlook. In the spot market, the transactions still fell short despite falling zinc prices yesterday. The downstream players still purchased on rigid demand. On the whole, relatively low inventory will still offer some support to zinc prices.

Overnight, Fed's Daley says actual impact of rate hike may be greater than implied by target rate, which is expected to peak at about 5%. Chinese central bank will launch a 200 billion yuan loan support program for six commercial banks under the guidance of "guaranteed housing delivery".

Tin: On the fundamentals, domestic warrants inventory rose more slowly, and falling prices revived the spot market. LME inventory remained unchanged, so did the overseas premiums. The import window remained closed. In terms of the futures market, SHFE tin fell after rebounding, and hovered around the 180,000 yuan/mt mark, with the collective withdrawal of money. To sum up, the market is still relatively balanced in terms of supply and demand, and the SHFE contract is likely to stabilise with the left of money.

Nickel: On the supply side, affected by the news, SHFE 2212 nickel dropped to a low of 192,000 yuan/mt in the early trading yesterday. Although the spot premium rebounded slightly, the upstream shipments still improved. In terms of imported pure nickel, the price ratio bounced back to 7.94, narrowing the import losses. In terms of NPI, an NPI plant in south China is about to start maintenance for nearly ten months. Two NPI production lines will be overhauled in turn, and its monthly output will be reduced by nearly 7,000 mt in physical content. The supply surplus in the market will be slightly alleviated in the future. On the demand side, according to SMM research, many steel mills planned to overhaul due to the poor downstream demand, and the total stainless steel output may decrease month-on-month in November. Orders from the civil alloy producers were fewer. In general, the supply and demand are slightly weakened, which may not prop up nickel prices strongly.

 

 

 

 

 

 

 

 

3.Copper Inventories in Domestic Bonded Zones Dip 3,700 mt from November 11

SMM survey showed that copper inventories in domestic bonded zones dipped 3,700 mt from November 11 to 24,600 mt as of November 18. Inventory in the Shanghai bonded zone dipped 3,000 mt to 20,400 mt, and that in the Guangdong bonded zone fell 700 mt to 4,200 mt. The decrease in bonded zone inventory this week was mainly caused by the inflow of goods from INE after the delivery of the copper contract to the domestic market. According to SMM survey, recently, arrivals of imported copper at ports have shown signs of increasing, and most of the imported spots have cleared customs and been shipped to the domestic market. 

4.Copper Inventory in Major Chinese Markets Add 10,900 mt from Monday

As of Friday November 18, SMM copper inventory across major Chinese markets stood at 128,000 mt, up 10,900 mt from Monday and 23,300 mt from last Friday. Compared with Monday’s data, the inventory in east China grew, while that in the south and south-west declined. The total inventory was 48,500 mt higher than in the same period last year when the figure was 79,500 mt. Among them, the inventory in Shanghai added 38,200 mt, that in Guangdong dipped 4,900 mt, and that in Jiangsu grew 14,700 mt. The sharp increase in inventory this week was caused by the delivery of SHFE 2211 copper.

In detail, the inventory in Shanghai grew 5,200 mt to 90,800 mt from Monday, and that in Jiangsu added 6,000 mt to 25,100 mt, which were contributed by the delivery of SHFE 2211 copper. Inventory in Guangdong dipped 200 mt to 6,500 mt. Arrivals of imported copper were fewer this week, and those of domestic copper was also low due to the maintenance of smelters. The market once witnessed a supply deficit of spots on Thursday and Friday. SMM presumes that in the near future, the inventory in Guangdong will remain low.

Looking forward, the arrival of imported copper next week will not be high, and the domestic smelters’ shipments will also decrease after the centralised delivery of warrants. Consumption is expected to be better than this week, and downstream companies will increase their purchases amid the falling copper prices. Besides, the narrow spread between the copper cathode and copper scrap will also boost copper cathode consumption to a certain extent. SMM believes that the inventory will fall next week.

 

 

 

5. October Copper Semis Imports and Exports both Weak, and Imports are Likely to Recover Slightly in November

China copper semis import volume is estimated to stand at 27,600 mt in October, down 17% MoM, according to SMM. The imports will then come in at 370,200 mt in January-October, down 21.5% YoY. Copper semis exports are estimated at 50,800 mt in October, down 4.4% MoM. The exports will be 583,100 mt in January-October, up 7.97% YoY.

SMM expects the October copper semis import volume to show a significant MoM decline mainly due to the National Day holiday in addition to poor domestic demand. The imports of copper rod and wire totalled 11,900 mt in September, up 13.5% MoM and down 26.7% YoY; copper plate/sheet and strip 7,300 mt, down 5.1% MoM and 26.6% YoY; copper foil 12,700 mt, up 6.6% MoM and down 31.4% YoY; and copper tube 1,100 mt, down 32.9% MoM and 41.4% YoY, according to the General Administration of Customs. Nevertheless, the import volume is likely to fall MoM in October as the customs office was closed during the National Day holiday. In terms of exports, the PMI readings of European countries and the US have all declined in the fourth quarter, and foreign companies' demand for Chinese copper semis will contract. The exports of copper rod and wire totalled 7,600 mt in September, down 3.3% MoM and up 1% YoY; copper plate/sheet and strip 7,800 mt, down 7.6% MoM and 4% YoY; copper tube 26,200 mt, down 4.1% MoM and 15% YoY; and copper foil 10,900 mt, up 8.3% MoM and down 4% YoY, according to the General Administration of Customs. In September, only copper foil exports showed positive growth, and fell across other sub-sectors; and it is expected this situation to extend into November. In addition, the ocean freight continued to decline in October, which also evidenced the current weak overseas demand. The Shanghai Export Containerized Freight Index (SCFI) stood at 1,579.21 as of November 4, a drop of 343.74 points or 17.88% from 1,922.95 at the end of September.

Looking ahead to November, the copper semis import volume is likely to rise with the recovering demand in China as well as the absence of long holidays in the month. The export volume, however, is still difficult to improve after the tide of Christmas orders and as there has been no significant increase in new orders.