SMM Evening Comments (Sep 16): Shanghai nonferrous metals declined for the most part, zinc advanced 0.6%

SHANGHAI, Sep 16 (SMM) — SHFE nonferrous metals broadly fell on Wednesday September 16 due to the sluggish demand.

The Federal Open Market Committee (FOMC) will announce its monetary policy decision and economic projections at 2 p.m. ET following its annual symposium in Jackson Hole. Although it is expected to keep rates on hold, markets will be hoping that the central bank maintains its accommodative stance.

Also on investors' radar Wednesday will be August's retail sales figures, due for publication at 8:30 a.m. ET, which should offer another indication as to the health of the recovery in consumer sentiment.

Shanghai nonferrous metals, except for zinc and aluminium, traded lower on Wednesday September 16. Nickel dropped 1.17% to lead the losses, lead weakened 0.76%, copper declined 0.82%, and tin fell 0.03%, while zinc climbed 0.6%, and aluminium advanced 0.31%.

Operating rates at secondary aluminium makers gained 2.8 percentage points from July to 53.1% in August, but 3.4 percentage points lower than a year ago.

The ferrous complex fell across the board. Hot-rolled coil fell 2.07%, rebar shed 1.79% and iron ore went down 5.07%.

Copper: The most-traded SHFE 2010 copper contract slid to an intraday low of 51,570 yuan/mt, before regaining some ground to finish the day 0.82% lower at 51,710 yuan/mt. The Federal Open Market Committee (FOMC) will announce its monetary policy decision and economic projections at 2 p.m. ET following its annual symposium in Jackson Hole. The People’s Bank of China (PBOC) has announced that it will undertake 120 billion yuan in 7-day reverse repo operations. Market liquidity supported copper prices. Whether support from longs could keep the contract above 52,000 yuan/mt will be watched tonight.

Aluminium: The most-liquid SHFE 2010 aluminium contract closed up 0.31% at 14,550 yuan/mt. Open interest remained unchanged and stood at 123,000 lots. The uncertainty of the demand end limited the upward room in the near term. The macro data and the flow of the fund will come under scrutiny.

Zinc: The most-active SHFE 2010 zinc contract fell to an intraday low of 19,820 yuan/mt and finished the day 0.6% higher at 19,955 yuan/mt. Open interest fell 4,545 lots to 79,811 lots. The contract is expected to remain above 20,000 yuan/mt tonight. U.S. Federal Reserve (Fed) Meeting Minutes will come under scrutiny.

Nickel: The most-traded SHFE 2011 nickel contract finished the day 1.17% lower at 117,540 yuan/mt today. Open interest fell 6,200 lots to 119,471 lots. LME nickel regained some ground as the US dollar index fell rapidly, and crude oil prices continued to rebound. Fed verdict will be monitored tonight. The contract will test whether it can stop falling if macro sentiment is boosted.

Lead: The most-traded SHFE 2010 lead contract fell to an intraday low of 14,865 yuan/mt in afternoon trading and finished the day 0.76% lower at 14,950 yuan/mt. Open interest fell 245 lots to 25,052 lots. Prices of battery scrap are unlikely to fall. The cost of secondary lead and the sluggish downstream procurement demand suppressed lead prices. The contract is expected to remain in choppy trading in the near term. Whether the contract could remain above 14,900 yuan/mt will be watched tonight.

Tin: The most-liquid SHFE 2011 tin contract ended 0.03% lower at 143,820 yuan/mt today. Open interest fell 431 lots to 21,824 lots. Pressure above is expected to around 40-day moving average of 144,500 yuan/mt. Pressure below is expected to around 143,000 yuan/mt.