SMM Evening Comments (Sep 16): Shanghai Nonferrous Metals Closed Mostly with Losses as Investors Pricing in Rate Hike Expectations

SHANGHAI, Sep 16 (SMM) – Shanghai nonferrous metals closed mostly with losses as the investors priced in the rate hike expectations, and some even expected a 100bps rate hike at the September Fed rate meeting.

Shanghai copper fell 0.55%, aluminium gained 0.21%, lead lost 0.76%, zinc dropped 1.83%, tin slid 0.72%, and nickel declined 1.56%.

Copper: The most-traded SHFE 2210 copper closed down 0.55% or 340 yuan/mt at 61,950 yuan/mt, with open interest down 7,291 lots to 145,499 lots.

On the macro front, (1) US initial jobless claims for the week of September 10 were 213,000, with a forecast of 226,000 and a previous print of 218,000. (Bearish ☆); (2) US retail sales for August stood at 0.3%, with a forecast of 0% and a previous print of -0.4%. (Bearish ☆).

In the spot market, the downstream players were still not very active in participating in market trades, and the buyers and sellers differed significantly as whether the premiums could sustain the current high next week. The buyers believed that the high premiums were the result of delayed arrivals of imported copper due to the typhoon, while the sellers believed that market transactions will be active next week with the performing of long-term orders as well as expected slump in copper prices amid expectations of aggressive rate hike by the US Fed in September. But the supply side was still tight, and the market is likely to post any big surprises even after the premiums fall from high.

Aluminium: The most-traded SHFE 2210 aluminium closed up 0.21% or 40 yuan/mt to 18,735 yuan/mt, with open interest down 2,523 lots to 173,581 lots.

On the supply side, some aluminium smelters in Yunnan reported expanding production cuts, which are estimated at 20-30%. On the other hand, there are still no signs of improvement across the downstream processing sectors. Therefore, the market is now intertwined with longs and shorts. Nonetheless, there is still expectations that the downstream consumption will recover with the arrival of the peak season as well as enhancing policy support. SHFE aluminium is expected to move between 18,300-19,200 yuan/mt in the near term.

Lead: The most-traded SHFE 2210 lead closed down 0.76% or 115 yuan/mt at 14,925 yuan/mt, with open interest up 1,939 lots to 43,101 lots.

In the spot market, quotes offered by the smelters remained flat recently, especially secondary lead. The sellers were slightly less willing to sell after lead prices dropped on the backdrop of high raw material cost. SHFE lead is expected to remain rangebound after SHFE lead fell below 15,000 yuan/mt and when the consumption was less than expected.

Zinc: The most-traded SHFE 2210 zinc closed down 1.83% or 455 yuan/mt at 24,350 yuan/mt, with open interest down 6,933 lots to 108,808 lots.

The shorts were quite active recently in light of rising zinc social inventory and lower downstream operating rates. Hence SHFE zinc posted slightly greater drops today.

Tin: The most-traded SHFE 2210 tin closed down 0.72% or 1,280 yuan/mt at 176,250 yuan/mt, with open interest down 967 lots to 32,925 lots.

In the spot market, quotes from the smelters still diverged in morning trade, and a few smelters were particularly firm to their prices, expanding the spread among the quotes. The sources were relatively tight according to the traders, while the premiums changed little. The downstream still purchased on rigid demand, while demanding lower prices.

Nickel: The most-traded SHFE 2210 nickel closed down 1.56% or 2,960 yuan/mt at 186,860 yuan/mt, with open interest down 8,536 lots to 73,993 lots.

In the spot market, Jinchuan nickel was in premiums of 5,500-6,100 yuan/mt, with an average of 5,800 yuan/mt, up 450 yuan/mt on a daily basis. NORNCIEL nickel was in premiums of 2,800-3,000 yuan/mt, with an average of 2,900 yuan/mt, up 150 yuan/mt from the previous trading day. Spot premiums were largely stable today as SHFE nickel dropped slightly today. Nickel briquette prices stood between 187,900-188,700 yuan/mt, down 6,050 yuan/mt from a day ago. The transactions were still almost zero as the cost efficiency of briquette fell.

[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.]