SHANGHAI, Sep 1 (SMM) – LME base metals closed mostly with losses as August ADP employment figure was less than expected, increasing by only 132,000, deterring the market from continuing to bet on the long dollar before the release of the non-farm payrolls data on Friday. And the hawkish voices from US Fed officials also weighed on the market sentiment.
LME copper shed 0.81%, aluminium lost 0.88%, lead fell 1.49%, and zinc slid 0.26%.
SHFE copper shed 1.05%, aluminium lost 0.16%, lead fell 0.27%, and zinc slid 0.02%.
Copper: LME copper opened at $7,785/mt yesterday and fell to $7,653.5/mt before rebounding to $7,846.5/mt. At last, the contract closed at $7,790.5/mt, down 0.81%. Trading volume was 24,000 lots, and open interest stood at 247,000 lots.
SHFE 2210 copper contract opened at 60,900 yuan/mt in overnight trading and climbed to 61,520 yuan/mt after dropping to 60,840 yuan/mt. At last, the contract closed at 61,290 yuan/mt, down 1.05%. Trading volume was 75,000 lots, and open interest stood at 158,000 lots.
On the macro front, the US "small non-farm payrolls" data released yesterday - the August ADP employment figure was less than expected, increasing by only 132,000, deterring the market from continuing to bet on the long dollar before the release of the non-farm payrolls data on Friday, with the dollar index retreating from its highs overnight. For crude oil, news that both OPEC and US crude oil production reached their highest levels before the covid-19 pandemic first broke out, while the market fears that the global economy will slow down further and international crude oil extended its decline overnight. Recent hawkish speeches by multiple officials at the Federal Reserve have extended market concerns about its aggressive rate hikes, with US stocks closing lower for the fourth consecutive day on Wednesday and recording the weakest August performance in seven years. Copper prices were pressured with cautiousness on the macro front.
The fundamentals changed little today, and low inventory still underpinned copper prices. And the supply is likely to pick up with the inflow of imported copper and less disruption from power rationing. Copper will gain less support from the fundamentals.
Aluminium: The most-traded SHFE 2210 aluminium contract opened at 18,235 yuan/mt overnight, and rose to 18,430 yuan/mt before closing at 18,380 yuan/mt, down 30 yuan/mt or 0.16%.
LME aluminium opened at $2,390/mt on Wednesday and closed at $2,363/mt, down $21/mt or 0.88%.
On the supply side, as the temperature in Sichuan has dropped and rainfall has increased recently, the power shortage in the province has eased, and local aluminium production has begun to resume. But the resumption of production was mainly seen in Guangyuan area. The overseas energy crisis continues to escalate, thus overseas aluminium smelters still face the risk of production reduction. On the demand side, the operating rates of domestic aluminium downstream processing enterprises remain low, but those in Jiangsu and Zhejiang may pick up after the power rationing policy is loosened. Given the weak supply and demand situation, energy crisis and macro factors, aluminium prices may continue to move in a wide range.
Lead: LME 3M lead contract opened at $1,990/mt. After Europe published the CPI data in August, LME lead continued to fall amid the expectation of high interest rate hike. LME lead prices rebounded slightly after hitting the lowest point at $1,938/m and finally closed at $1,955.5/mt, down 1.49%.
SHFE 2210 lead contract rose significantly after opening overnight, but then fell gradually and closed at 14,870 yuan/mt, down 0.27%. The open interest was 62,172 lots, up 2,511 lots from yesterday.
Zinc: LME zinc closed at $3,463/mt on Wednesday, down $9/mt or 0.26%. The open interest added 672 lots 198,000 lots. Overnight LME inventory rose 75 mt to 77,050 mt, up 0.1%. LME zinc was pressured by hawkish voices from the US Fed officials, and the less-than-expected US ADP employment also weighed on the market sentiment.
The most traded SHFE 2210 zinc contract closed at 24,870 yuan/mt overnight, down 5 yuan/mt or 0.02%. The open interest added 850 lots to 135,000 lots. On the supply side, August refined zinc output is estimated at 477,500 mt amid influences like power rationing and maintenance, lower than the original target set at the beginning of the month. The output is likely to rebound to 530,000 mt with the recovery of power and ore supply. On the consumption side, the pandemic resurged in some places in China, which is worth attention though it has not impacted the production yet.
Tin: The most-traded SHFE tin contract fell sharply overnight, and moved below 190,000 yuan/mt. More longs and shorts entered the market. The domestic tin inventory under SHFE warrants continued to fall, while LME tin inventory rose again. Trades in the spot market declined as fewer cargoes were available. Overseas premiums remained low. The import window was slightly open. Imported tin was offered at small discounts. The price gap between SHFE 2209 and 2210 tin contracts widened. Spot premiums rose. SHFE tin is expected to move rangebound.
Nickel: On the supply side, the pure nickel spot premiums showed great divergence. Premiums of Jinchuan nickel rallied amid support of downstream demand, while NORNICKEL nickel dropped due to weak demand. For NPI, the situation of oversupply kept containing NPI prices amid high inventory and constantly inflow of Indonesia NPI. On the demand side, the spot prices of stainless steel in Wuxi and Foshan were stable, and are likely to remain rangebound with some downward potentials in the near term. For alloy, the military sector outperformed the civil sector. To sum up, nickel prices will remain at the current level with some potential drops with downstream demand picking up slightly.
[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]
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