SMM Morning Comment For SHFE Base Metals September 12

SHANGHAI, Sep 12 (SMM) –

Copper

LME copper prices opened at $8344/mt and closed at $8402/mt in overnight trading, a gain of 2.09%, with the low-end of $8344/mt and the high-end of $8432/mt. Trading volume was 19,000 lots, and open interest stood at 284,000 lots. The most active SHFE 2310 copper contract prices opened at 69230 yuan/mt and finished at 69360 yuan/mt last evening, up 0.95%, with the low-end of 69230 yuan/mt and the high-end of 69500 yuan/mt. Trading volume was 26,000 lots, and open interest stood at 151,000 lots. On the macro front, a survey by the New York Fed showed that U.S. consumers' inflation expectations were basically stable in August, but households were more worried about their financial situation and more pessimistic about the job market. China’s outstanding social financing stood at 368.61 trillion yuan at end-August, a year-on-year increase of 9%. On Fundamentals, as of Monday September 11, SMM copper inventories across major Chinese markets stood at 95,100 mt, down 5,400 mt from last Friday and 5,300 mt higher than the same period last year. Inventories in east China and south China were significantly lower last weekend due to less arrivals and increased downstream replenishment. In terms of consumption, due to the large price difference between the SHFE front-month and SHFE next-month copper contracts, downstream purchasing was weak even as spot quotes were low. Domestic economic data bolstered copper prices.

Aluminum

Overnight, the most-traded SHFE 2310 aluminum contract opened at 19,180 yuan/mt, with its lowest and highest at 19,140 yuan/mt and 19,245 yuan/mt before closing at 19,225 yuan/mt, up 145 yuan/mt or 0.76%. LME aluminum opened at $2,184.5/mt on Monday, with its high and low at $2,210.5/mt and $2,184/mt respectively before closing at $2,207/mt, up $23.5/mt or 1.19%.

At the beginning of this week, the overall macro sentiment was mainly optimistic. In the near future, we need to pay close attention to the multiple impacts of interest rate hike expectations and exchange rate fluctuations on the non-ferrous metals market. Aluminum supply increased, with domestic social inventory of aluminum ingots rising above the 500,000 mt mark, and the inventory pressure in September may mount. At the same time, the supply of imported goods in the market has increased recently, and we need to be alert to the impact of imported low-priced supplies on the domestic aluminum spot market. Low inventory will support aluminum price, while supply pressure will cap gains.

Lead

LME lead prices opened at $2227.5/mt and closed at $2250/mt last evening, up 1.03%, with the high-end of $2252/mt and the low-end of $2214.5/mt.

The most active SHFE 2310 lead contract prices opened at 17090 yuan/mt last evening, and closed at 17100 yuan/mt, an increase of 0.17%, with the high-end of 17175 yuan/mt and the low-end of 17030 yuan/mt.

Zinc

Overnight, LME zinc prices opened at $2438/mt, and closed at $2507/mt, up $67/mt or 2.75%. Trading volume increased to 9874 lots, and open interest grew 2743 lots to 206,000 lots. LME zinc inventory decreased by 1650 mt to 141775 mt, a drop of 1.19%. The RMB strengthened overnight and the U.S. dollar weakened, supporting the rise of non-ferrous metals prices. In addition, overseas large-scale infrastructure construction is expected to resume, and overseas ore supply is less than expected.

The most active SHFE 2310 zinc contract prices opened at 21500 yuan/mt and closed at 21815 yuan/mt last evening, up 540 yuan/mt or 2.54%. The trading volume was down to 99528 lots, and open interest stood at 117,000 lots. Overnight, SHFE zinc prices hit a nearly 5-month high, mainly due to strong domestic credit data and renewed consumption expectations amid signals of economic stabilization.

Tin

Overnight, SHFE 2310 tin contract rose to 219,690 yuan/mt, and closed at 218,410 yuan/mt, up 0.73%. Spot premiums and discounts barely changed yesterday. Small brand tin ingots were offered at premiums of 0-500 yuan/mt, and premiums of 200-500 yuan/mt for delivery brands, premiums of 800-1,100 yuan/mt for Yunxi brand, and discounts of 700-900 yuan/mt for imported brand tin ingots slated to arrive in China in mid-to-late September. Transactions in the spot market improved significantly after tin prices fell back yesterday.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 165,950 yuan/mt, and closed at 166,450 yuan/mt, up 230 yuan/mt. Trading volume fell by 6,543 lots, and open interest increased by 1,434 lots. A string of US economic data will be released soon. Spot market trades improved yesterday as lower prices stocked buying. Nickel price is expected to be volatile.