SMM Evening Comments (Sep 11): Shanghai nonferrous metals declined for the most part, zinc advanced 0.73%

SHANGHAI, Sep 11 (SMM) – SHFE nonferrous metals broadly fell on Friday September 11 as macro factors led to panic sentiment in the market.

Shanghai nonferrous metals, except for zinc, traded lower on Friday August 21. Tin dropped 1.48% to lead the losses, lead weakened 0.99%, nickel shed 0.33%, copper declined 0.73%, and aluminium fell 0.94%, while zinc advanced 0.73%.

Inventories of rebar across Chinese steelmakers and social warehouses stood at 11.5 million mt as of Sep 10, down slightly by 0.7% from a week ago and up 49.4% from a year earlier.

SMM data showed that the overall inventories of hot-rolled coils (HRC), including stocks across Chinese steelmakers and social warehouses, dipped 0.06% from the previous week to 3.95 million mt, but this was 20.07% higher than a year ago.  

The ferrous complex rose across the board. Hot-rolled coil climbed 0.64%, rebar went up 0.14% and iron ore gained 0.84%.

Copper: The most-traded SHFE 2010 copper contract closed 0.73% lower at 51,680 yuan/mt today. Copper prices fell for three consecutive days. The economic stimulus policies of European and American weakened, leading to the market's worries about the economic recovery. Combined with geopolitical risks, large fluctuations in stock market and oil market, the macro sentiment is cautious.  Oil prices plunged again last night, suppressed the copper price by 51,200 yuan/mt. Whether the contract could maintain its upward trend will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2010 aluminium contract climbed to an intraday high of 14,515 yuan/mt after the opening bell and finished the day 0.94% weaker at 14,235 yuan/mt. Open interest rose 4,695 lots to 127,000 lots. Delivery of the futures contracts is approaching and the basis continued to fall.

Zinc: The most-active SHFE 2010 zinc contract rose to an intraday high of 19,495 yuan/mt and ended 0.73% higher at 19,435 yuan/mt today. Open interest fell 5,909 lots to 87,208 lots. Zinc prices started to rise after seven consecutive days’ decline. Downstream purchase improved at low prices this week, and social inventories fell by 19,600 mt. The offer prices of imported ore have gradually declined, and the weak demand of winter stocks and the weak supply of ore in Q4 have also boosted market sentiment. The contract is expected to move around five-day moving average tonight.

Nickel: The most-traded SHFE 2011 nickel contract fell to an intraday low of 114,730 yuan/mt and closed down 0.33% at 116,150 yuan/mt today. Open interest fell 6,111 lots to 126,581 lots. The latest reading on the US consumer price index (CPI) and whether  the contract could move 117,000 yuan/mt will be watched tonight. Inventories of refined nickel in the Shanghai bonded areas remained unchanged from a week ago and stood at 20,800 mt as of September 11, showed SMM data.

Lead: The most-traded SHFE 2010 lead contract climbed to an intraday high of 15,035 yuan/mt this afternoon, before recouping some gains to close 0.99% lower on the day at 15,000 yuan/mt. Open interest fell 1,145 lots to 27,156 lots. Fundamental downstream consumption improved significantly compared with the previous period. Whether support from longs could keep the contract above 15,000 yuan/mt will be watched tonight.

Tin: The most-liquid SHFE 2011 tin contract fell to an intraday low of 141,450 yuan/mt and ended 1.48% lower at 141,980 yuan/mt today. Open interest rose 1,184 lots to 23,277 lots. Pressure below is expected to around 140,000 yuan/mt.