SMM Evening Comments (Sep 1): Shanghai nonferrous metals closed mostly higher, aluminium fell 0.27%

SHANGHAI, Sep 1 (SMM) — SHFE nonferrous metals rose for the most part on Tuesday September 1 as manufacturing demand and supply continued to recover, and overseas demand started to pick up.

The Caixin/Markit manufacturing Purchasing Managers’ Index (PMI) came in at 53.1 for August, compared to 52.8 in July. Economists had expected Caixin/Markit manufacturing PMI to come in at 52.7. The expansion in August was the fastest since January 2011, Caixin and IHS Markit said in their joint report.

Zinc was the best performer with a rise of 2.35%. Cooper advanced 1.92%, tin climbed 0.75%, lead increased 1.88% and nickel went up 1.84%, while aluminium decreased 0.27%.

A total of 86 vessels carrying 13.58 million mt of iron ore arrived at major Chinese ports during August 23-29, SMM estimates. This was down 950,000 mt from the previous week, but up 2.23 million mt from the same period last year. The amount of arrivals in Tangshan and Tianjin declined on the week.

The ferrous complex also traded higher. Iron ore increased 0.24%, rebar rose 0.32%, and hot-rolled coil gained 1.23%.

Copper: The most-traded SHFE 2010 copper contract rose to an intraday high of 53,050 yuan/mt in the afternoon session, and closed 1.92% higher at 52,990 yuan/mt today. The Caixin/Markit manufacturing Purchasing Managers’ Index (PMI) came in at 53.1 for August, compared to 52.8 in July, hitting its highest level since February 2011. The Caixin/Markit manufacturing Purchasing Managers’ Index (PMI) remained in expansionary territory for six consecutive months, reflecting that manufacturing demand and supply continued to recover amid investors’ optimism, which supported copper prices. 6.3-magnitude earthquake occurred in northern Chile today, which led to the market's worries about tight copper supply. The US finalised Markit manufacturing purchasing Managers’ Index (PMI) in August will be announced today. Whether the contract could remain above 53,000 yuan/mt will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2010 aluminium contract ended 0.27% lower at 14,555 yuan/mt today. Open interest increased 5,084 lots to 123,000 lots. The basis and the flow of funds will come under scrutiny.

Zinc: The most-active SHFE 2010 zinc contract finished the day 2.35% higher at 20,450 yuan/mt, after hitting an intraday high of 20,460 yuan/mt. Open interest fell 10,118 lots to 116,000 lots. The contract could maintain its upward trend tonight.

Nickel: The most-traded SHFE 2011 contract finished the day 1.84% higher at 123,080 yuan/mt. The contract is expected to fluctuate between 118000-125000 yuan/mt this week.

Lead: The most-active SHFE 2010 contract climbed to an intraday high of 15,970 yuan/mt in the afternoon session, ending the day 1.88% higher at 15,965 yuan/mt. Open interest shrank 1,907 lots to 25,307 lots. Whether the contract could move above 20-day moving average of 16,000 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2011 tin contract closed up 0.75% higher at 145,800 yuan/mt today. Open interest increased 976 lots to 233,307 lots. Social inventories slightly declined and downstream manufacturers have positive expectations for short-term production and sales in the near future, which supported tin prices. Pressure above is expected to around 147,000 yuan/mt.