SHANGHAI, Sep 22 (SMM) – SHFE metals basically trended lower on Wednesday morning. Meanwhile, their counterparts on LME mostly increased.
SHFE market was closed for the Mid-Autumn Festival holiday yesterday.
LME non-ferrous metals basically closed lower in the trading on Tuesday day or night. Copper advanced 0.13%, aluminium fell 0.45%, lead dropped 0.09%, and zinc decreased 0.51%.
Copper: Three-month LME copper advanced 0.13% to close at $9,018/mt on Tuesday night, after hitting the lowest level at $8,810/mt, and is expected to trade between $9,050-9,160/mt today. SHFE copper is expected to trade between 68,100-68,700 yuan/mt today, with open interest between 120-380 yuan/mt.
During the Mid-Autumn Festival, LME copper kept falling as Evergrande was on the verge of default, which triggered the market concerns, and the discussions on the upper limit of US debt purchase drove up US dollar. However, US dollar fell slightly last night, and LME copper increased in the late trade. Investors are currently waiting for the results of the Fed's two-day policy meeting. If there is a clearer time for the reduction of liquidity, US dollar may continue to rise and weigh on copper prices. In addition, the intensified domestic power rationing has spread from the upstream industries to the downstream industries, and it is likely that the inventory will have an inflection point earlier. In the spot market, on the last trading day before the holiday, downstream users made purchase for restocking as the prices fell. The trade of long-term orders was also steady as there will be fewer trading days in October. Premiums stabilised last week.
Aluminium: LME aluminium opened at $2,866/mt on Tuesday morning and fell due to the strengthening of the US dollar, and closed at $2,848/mt, down $13/mt or 0.45%. The most-traded SHFE 2111 aluminium contract opened at 22,670 yuan/mt last Friday, with the highest and lowest prices at 22,780 yuan/mt and 22,480 yuan/mt before closing at 22,585 yuan/mt, down 50 yuan/mt or 0.22%. Open interest fell 932 lots to 261,000 lots, and trading volume was 285,000 lots. It is expected that SHFE aluminium will continue to fluctuate within a narrow range, and the market will continue to pay attention to the implementation of power rationing policies in different regions.
Lead: LME lead fluctuated lower during the Mid-Autumn Festival holiday to hit a nearly three-month low at $2,131/mt, as US dollar hit a high at 93 points. Three-month LME lead closed $2/mt or 0.09% lower at $2150/mt in the overnight trading yesterday.
Zinc: Three-month LME zinc fell 0.51% to settle at $2,996/mt last Friday, with open interest decreasing 269 lots to 262,000 lots. Zinc stocks across LME-listed warehouses dropped by 1,475 mt or 0.66% to 222,475 mt. US Dollar went up during the Mid-Autumn Festival holiday, pressuring on zinc prices. The US CCI in August remained at the lowest level in the past 10 years. LME zinc prices are expected to move between $2,980-3,030/mt today.
Production at smelters has been affected by power rationing in Guangxi. Some producers have been cut power supply by 20% in Jiangsu and the power rationing at others even extended until the National Day on the back of dual control of energy consumption. Downstream plants took the Mid-Autumn Festival holidays amid weak orders. Consumption was not bullish in the high season. The most-traded SHFE 2110 zinc contract is expected to move between 22,500-23,000 yuan/mt and spot premiums for domestic #0 Shuangyan will be seen at 170-180 yuan/mt against the October contract.
Tin: The domestic tin supply and demand situation has not changed much from before the holiday. Tin production was little affected by power rationing, while downstream demand for raw materials is expected to increase slightly in September. SHFE tin contract is expected to test resistance at 259,500 yuan/mt and find support at 257,000 yuan/mt today.
