SMM Morning Comment For SHFE Base Metals October 9

SHANGHAI, October 9(SMM) –
Copper
Due to the National Day holiday, the SHFE Copper market was closed. Last Friday night, LME copper opened at $7,985.5/mt, then dipped to $7,921/mt at the beginning of the session, before rising to $8,065/mt.
On the macro front, previous data showed that US employment growth was stronger than expected in September, with the number of employed people increasing by 336,000, better than the 170,000 of Dow Jones Forecast. There are concerns that the Fed may keep interest rates higher for longer if the labor market remains tight. In terms of fundamentals, as of last Saturday, October 7, SMM copper inventories in mainstream regions of China increased by 20,500 mt from September 28 to 93,600 mt, 10,900 mt higher than the 82,700 mt in the same period last year. Downstream purchasing was limited during the holidays, and many regions showed varying degrees of inventory accumulation. In terms of consumption, it is expected that there will be no significant increase in demand after the holiday. In terms of price, insufficient demand is expected to keep copper prices at a relatively low level.
Aluminum
On the final trading day before the National Day holiday, the most-traded SHFE 2311 aluminum contract opened at 19,420 yuan/mt, with its lowest and highest at 19,390 yuan/mt and 19,645 yuan/mt before closing at 19,445 yuan/mt, up 55 yuan/mt or 0.28% compared with the previous trading day. LME aluminum opened at $2,232/mt, with its high and low at $2,248/mt and $2,222.5/mt respectively before closing at $2,246/mt, an increase of $14/mt or 0.63%.
Overall, resulting from the continued strengthening of the US dollar index and expectations of overseas interest rate hikes, LME aluminum was on the way to rising during the holiday. The domestic manufacturing PMI data in September rebounded above 50%, further confirming the consumption improvement. Subsequent favorable policy and internal structural adjustment are expected to promote further economic recovery. In terms of fundamentals, the domestic supply is approaching its peak, and it is difficult to see a significant increment in the short term. Recently, due to the long holiday and the recent replenishment of overseas aluminum ingots, the domestic aluminum social inventory soared after the holiday, but the total inventory was still at a historically low level for the same period. Accumulated inventory may suppress SHFE aluminum prices and spot premiums, but in the medium and long term, with the growth rate of the supply narrowing largely, aluminum supply and demand will maintain a tight balance, providing support to the SHFE aluminum market.
Lead
Last Friday, LME lead opened at a low of $2,133/mt and stabilized sideways during the Asian session. Entering the European session, it fluctuated upward to reach $2,166/mt, and finally closed at $2,241/mt, an increase of 0.16%, recording two consecutive of gains. Due to the National Day holiday, the SHFE lead market was closed.
Zinc
Last Friday, LME zinc opened at $2,465/mt. It fluctuated around $2,475/mt, then rose rapidly, and finally closed at $2,499/mt, up $32.5/mt, or 1.32%. Trading volume increased to 6,299 lots, and open interest rose by 802 lots to 229,000 lots. Last Friday, LME Zinc met resistance at the 5-day moving average, forming a suppression for prices. LME inventories decreased by 1,600 mt to 94,375 mt, recording a decrease. Last Friday, SHFE zinc was suspended during the National Day holiday. The US non-farm payrolls data for September greatly exceeded expectations. The US dollar index quickly fell back to lows after rising. The upward pressure of LME zinc was weak, and despite the continuous decline previously, it rebounded slightly. Domestically, since the extent of inventory accumulation was less than expected, coupled with downstream consumption and replenishment, the downside space for SHFE zinc is predicted to be limited in the short term.
Tin
LME tin price fell sharply and then bounced back a little during the National Day holiday. LME tin stocks rose from 7080 mt on September 28 to 7515 mt on October 6.
Most domestic tin smelters produced normally during the holiday, except for a few who took a break or carried out maintenance. Operating rates of tin smelters in Yunnan and Jiangxi dropped 3.7 percentage points during the holiday. Imported tin ingots entered the domestic market during the holiday. Hence, supply was ample post holiday. It remains to be seen whether orders at soldering enterprises will sustain growth after the holiday.