SMM Evening Comments (Sep 9): Shanghai Nonferrous Metals Closed Mostly with Gains amid Pressured US Dollar

SHANGHAI, Sep 9 (SMM) – Shanghai nonferrous metals closed mostly with gains as European bond yields soared, while the dollar weakened as a result, which offered support to metals prices.

Shanghai copper rose 3.46%, aluminium added 2.99%, lead fell 0.93%, zinc jumped 3.09%, tin advanced 1.83%, and nickel climbed 8.55%.

Copper: The most-traded SHFE 2210 copper closed up 3.46% or 2,110 yuan/mt at 63,070 yuan/mt, with open interest up 539 lots to 162,113 lots.

On the macro front, the European Central Bank raised interest rates sharply by 75BP, the first significant rate hike since 1999. European bond yields soared, while the dollar weakened as a result, and copper prices were supported.

In the spot market, standard-quality copper was in premiums of 400-410 yuan/mt in morning trade, and the spread between good and standard-quality copper stood at 50-60 yuan/mt amid scarce sources of the former. The premiums then fell when the transactions were sluggish and the spread between SHFE 2209 and 2210 expanded to 450-500 yuan/mt. The premiums of standard-quality copper fell to 380-390 yuan/mt.

Aluminium: The most-traded SHFE 2210 aluminium closed up 2.99% or 550 yuan/mt to 18,965 yuan/mt, with open interest up 7,953 lots to 174,663 lots.

On the whole, the high domestic energy cost has provided cost support. Although Yunnan has not imposed power rationing, the market is bullish. It is expected that SHFE aluminium prices will hold firm in the short term.

Lead: The most-traded SHFE 2210 lead closed down 0.93% or 140 yuan/mt at 14,940 yuan/mt, with open interest down 1,291 lots to 46,900 lots.

In the spot market, the lead supply is likely to rise significantly in September after primary lead smelters resume the production from maintenance. And the secondary lead smelters will also ramp up the production after the Mid-Autumn Festival maintenance. Currently, the market players are bearish toward lead prices, and the price moves based on the production situation after the Festival are worth attention.

Zinc: The most-traded SHFE 2210 zinc closed up 3.09% or 740 yuan/mt at 24,710 yuan/mt, with open interest up 4,318 lots to 116,834 lots.

The support on the supply side weakened further. In the spot market, transactions in places with low premiums remained active ahead of the Mid-Autumn Festival, but it was quiet in Tianjin and Shanghai where the premiums are usually high after zinc prices rallied. On the whole, the fundamentals were unable to support the zinc price.

Tin: The most-traded SHFE 2210 tin closed up 1.83% or 3,210 yuan/mt at 178,680 yuan/mt, with open interest down 841 lots to 35,599 lots.

In the spot market, the smelters quoted as usual in morning trade, and only a few smelters held the prices firm. The number of quotes from the traders was still relatively low, and the traders were slightly more willing to ship ahead of the Mid-Autumn Festival. The downstream still purchased on rigid demand, but restocking activities were not robust prior to the Festival.

Nickel: The most-traded SHFE 2210 nickel closed up 8.55% or 14,880 yuan/mt at 189,000 yuan/mt, with open interest up 15,898 lots to 92,242 lots.

In the spot market, Jinchuan nickel was in premiums of 8,000-9,000 yuan/mt, an average of 8,500 yuan/mt, down 1,250 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 3,000-3,500 yuan/mt, an average of 3,250 yuan/mt, down 400 yuan/mt on a daily basis. Spot premiums dropped today after SHFE nickel surged. But the spot prices rose another 6,000 yuan/mt, greatly suppressing the spot transactions. Nickel briquette prices stood at 184,500-185,500 yuan/mt, up 6,000 yuan/mt from a day ago.

[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.]