SMM Evening Comments (Sep 3): Shanghai nonferrous metals declined for the most part, tin advanced 0.87%

SHANGHAI, Sep 3 (SMM) – SHFE nonferrous metals broadly fell on Thursday September 3 due to the upbeat data of The IHS Markit US Manufacturing Purchasing Managers' Index (PMI).

The IHS Markit US Manufacturing PMI was revised lower to 53.1 in August of 2020 from a preliminary of 53.6. Still, the reading pointed to the strongest expansion in factory activity since January of 2019, following the easing of coronavirus restrictions and the reopening of large sections of the manufacturing sector.

Shanghai nonferrous metals, except for tin, traded lower on Friday August 21. Nickel dropped 1.77% to lead the losses, lead weakened 1.23%, zinc shed 0.64%, copper declined 0.82%, and aluminium fell 1%, while tin advanced 0.87%.

An SMM survey showed that operating rates of BFs slipped 0.2 percentage point on the week to 89.6% in the first week of September, following a decline of 0.4 percentage point in the previous week.

The ferrous complex closed mixed. Rebar added 0.5%, iron ore rose 0.88%, while hot-rolled coil fell 0.23%.

Copper: The most-traded SHFE 2010 copper contract rose to an intraday high of 52,170 yuan/mt after the opening bell, and closed 0.82% lower at 51,760 yuan/mt today. It was announced last night that Automatic data processing (ADP) employment for August rose 428,000, recording the third largest increase, supporting the US dollar index and curbing copper prices. The drop in crude oil also accounted for the decline of copper prices. The US Labor Department report on initial jobless claims as of August 29 will come under scrutiny tonight. The contract will test support from 51,500 yuan/mt tonight.

Aluminium: The most-liquid SHFE 2010 aluminium contract closed down 1% at 14,130 yuan/mt today. Open interest fell 1,823 lots to 14,310 lots. Social inventories of primary aluminium ingots across eight consumption areas in China, including SHFE warrants, rose 6,000 mt from a week ago to 761,000 mt as of Thursday September 3.

Zinc: The most-active SHFE 2010 zinc contract fluctuated around 20,200 yuan/mt and closed 0.64% lower at 20,180 yuan/mt. Open interest fell 6,196 lots to 102,160 lots. Macro uncertainty dampened market sentiment, suppressing zinc prices. The zinc ingot supply increased without the consumption optimism. Support from the 10-day moving average will come under scrutiny tonight.

Nickel: The most-traded SHFE 2011 nickel contract f surged to an intraday high of 123,930 yuan/mt, and closed 1.77% lower at 120,010 yuan/mt today as the dollar rebounded and bullion declined. Open interest increased 1,835 lots to 166,434 lots. SMM will focus on the impact of the US Labor Department report on initial jobless claims as of August 29, the finalised Markit US PMI for the service sector in August, and inventory data from the US Energy Information Administration (EIA) as of August 28 tonight.

Lead: The most-traded SHFE 2010 lead contract fell 1.23% to close at an intraday low of 15,670 yuan/mt today, after climbing to an intraday high of 15,880 yuan/mt. Open interest increased 337 lots to 25,244 lots. New Revised People’s Republic of China (PRC) Law on the Prevention and Control of Solid Waste Pollution took effect on September 1, making it difficult to collect scrap batteries. The tight supply of secondary lead will support lead prices. Whether the contract could move above five- and 10-day moving average of 15,800 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2011 tin contract rose to an intraday high of 148,680 yuan/mt, before giving some gains to end 0.87% higher at 147,290 yuan/mt today. Open interest fell 544 lots to 23,772 lots. Pressure above is expected to around 148,500 yuan/mt.