SMM Evening Comments (Sep 10): Shanghai nonferrous metals fell across the board for the 2nd day

SHANGHAI, Sep 10 (SMM) – SHFE nonferrous metals fell across the board on Thursday September 10, extending decreases from the prior day.

The ECB’s Governing Council will convene on Wednesday and Thursday to discuss its monetary policy stance and its assessment of the euro zone economy. Since its last meeting, economic data has shown signs of a slowing of the recovery, the euro has appreciated and core inflation slumped to a new record low in August.

Lead led the losses and slumped 2.28%, copper slipped 0.37%, zinc eased 1.6%, nickel lost 0.8%, tin went down 1.01% and aluminium decreased 0.28%.

An SMM survey showed that 35 steelmakers in China plan to produce a total of 10.46 million mt of hot-rolled coils and plates in September, up 0.3% from the actual output in August.

The ferrous complex also traded lower. Hot-rolled coil fell 1.76%, rebar shed 1.6% and iron ore went down 2.26%.

Copper: The most-traded SHFE 2010 copper contract closed 0.37% lower at 51,700 yuan/mt today. LME copper fell below US$ 6,700/mt, and the domestic A-share and industrial products prices fell for the most part. Sluggish macro sentiment suppressed copper prices. The US Labor Department report on initial jobless claims as of September 5 will come under scrutiny tonight. The contract will test support from 51,500 yuan/mt tonight.

Aluminium: The most-liquid SHFE 2010 aluminium contract finished the day 0.28% weaker at 14,340 yuan/mt in choppy trading. Open interest rose 1,049 lots to 123,000 lots. SMM data showed that stocks across eight consumption areas in China, including SHFE warrants, rose 3,000 mt from a week ago to stand at 764,000 mt as of Thursday September 10.

Zinc: The most-active SHFE 2010 zinc contract ended 1.6% weaker at 19,055 yuan/mt today as investors added their short positions. Open interest rose 168 lots to 93,117 lots. Zinc prices fell for the seven consecutive days. Important domestic macro data will be released this week. Combined with the continued tension between major powers, leading to the unclear macro prospects. Whether the contract could remain above 19,000 yuan/mt will be watched tonight.

Nickel: The most-traded SHFE 2011 nickel contract closed down 0.8% at 115,770 yuan/mt today. Open interest rose 3,829 lots to 132,692 lots. The US Labor Department report on initial jobless claims and producer price index (PPI) for August will come under scrutiny tonight.

Lead: The most-traded SHFE 2010 lead contract fell rapidly to a session low of 14,920 yuan/mt, before regaining some ground to finishe the day 2.28% lower at 14,970 yuan/mt. Open interest rose 3,253 lots to 28,301 lots. Fundamental downstream consumption has not improved much. On the macro front, Aggregate Financing to the Real Economy (AFRE) data in August will come under scrutiny. Whether support from shorts could keep the contract above 14,800 yuan/mt will be watched tonight.

Tin: The most-liquid SHFE 2011 tin contract fell to an intraday low of 143,000 yuan/mt and ended 1.01% lower at 143,310 yuan/mt today. Open interest rose 372 lots to 22,093 lots. The rise of the US dollar slowed down with a trend of rebound, leading to limited downside room of tin prices. Pressure below is expected to around 142,000 yuan/mt.