SMM Morning Comment For SHFE Base Metals September 5

SHANGHAI, Sep 5 (SMM) –

Copper

LME copper prices opened at $8438/mt and closed at $8450/mt in overnight trading, a drop of 0.49%, with the low-end of $8416.5/mt and the high-end of $8462/mt. Trading volume was 11,000 lots, and open interest stood at 283,000 lots. The most active SHFE 2310 copper contract prices opened at 69210 yuan/mt and finished at 69410 yuan/mt overnight, down 0.44%, with the low-end of 69150 yuan/mt and the high-end of 69410 yuan/mt. Trading volume was 19,000 lots and open interest stood at 162,000 lots. On the macro front, no important data has been released in the United States. In Europe, its central bank president Lagarde still did not hint at how the European Central Bank will act next week in her latest speech, while ECB Governing Council member Centeno said there is a risk of "doing too much" on interest rates. On Fundamentals, As of Monday September 4, SMM copper inventories across major Chinese markets stood at 96,700 mt, up 8,100 mt from last Friday and 21,600 mt higher from the same period last year. Inventories in east China increased due to increased copper imports, and downstream consumer demand has been weak due to high copper prices; inventories increased in south China due to the arrivals of domestically produced copper and poor consumption. Consumption can hardly recover in the near future. In terms of price, the market still needs to wait for more guidance, and it is expected that there will be limited room for copper price increases in the near future. The copper prices will remain at high levels.

Aluminum

Overnight, the most-traded SHFE 2310 aluminium contract opened at 18,950 yuan/mt, with the lowest and highest prices at 18,890 yuan/mt and 19,040 yuan/mt before closing at 19,025 yuan/mt, up 60 yuan/mt or 0.32% from the previous trading day. LME aluminium opened at $2,238/mt on Monday with its high and low at $2,242/mt and $2,195/mt respectively before closing at $2,200.5/mt.

On the macro side, domestic favorable policies wield boosting effects on markets significantly. But the vacillating attitude of the Fed to raise interest rates added to macro uncertainty. In the fundamentals, recent concentrated arrivals of aluminum ingots increased social inventory accumulation, weakening the support for aluminum prices. The short-term aluminum price is expected to face downward upward, but it is necessary to closely observe the consumption changes in the peak season.

Lead

Overnight, LME lead prices opened at $2,250.5/mt and closed at $2202/mt, down $53.5/mt, or 2.37%. Bears inreased their positions. The most active SHFE lead contract prices opened at 16959 yuan/mt and fell 390 yuan/mt or 2.3% to close at 16575 yuan/mt last evening, with the low-end of 16450 yuan/mt. Open interest decreased 1816 lots to 93,000 lots.

Zinc

LME zinc prices opened at $2488/mt last evening and closed down $20.5/mt or 0.82% at $2466.5/mt. Trading volume decreased to 5757 lots, and open interest increased by 4496 lots to 201,000 lots. LME zinc inventory remained flat. The market is waiting for more data guidance. The most active SHFE 2310 zinc contract prices opened at 21290 yuan/mt and lost 15 yuan/mt or 0.07% to settle at 21250 yuan/mt in overnight trading. Trading volumes decreased to 49141 lots and open interest increased 384 lots to 105,000 lots. The state of domestic social inventory destocking has turned to accumulation. But as the current smelter production profit exceeds 800 yuan/mt, output may remain at a high level.

Tin

Overnight, SHFE 2310 tin contract price increased a little after opening, once hitting a high of 222,820 yuan/mt. The price finally closed at 221,140 yuan/mt, up 1.44%.

Spot premiums and discounts changed little on September 4 morning. Small brand tin ingots were offered at premiums of 0-300 yuan/mt, and premiums of 300-500 yuan/mt for delivery brands, premiums of 800-1,000 yuan/mt for Yunxi brand, and discounts of 300-200 yuan/mt for imported brands. Downstream purchases were sluggish yesterday, even after SHFE tin price fell during the daytime session.

Nickel

The most traded SHFE nickel contract opened at 169,780 yuan/mt and closed at 170,710 yuan/mt at the night session on September 4, an increase of 2,510 yuan/mt from the previous trading day. The trading volume and the open interest increased by 75,681 lots and 4,181 lots respectively. The US ADP employment data released last Wednesday night and the August jobless rate released on Friday night both indicate that the current US economy is not resilient enough, which may influence the Fed’s interest rate hike process in September. In terms of fundamentals, MHP prices fluctuated upward under the dual support of domestic supply shortage and Indonesian nickel ore export quota issue. Trades in spot market remained thin yesterday. In summary, nickel prices may be volatile in the future.