SMM Morning Comment For SHFE Base Metals August 31

SHANGHAI, Aug 31 (SMM) –

Copper

LME copper opened at $8,421.5/mt and closed with a gain of 0.15% at $8,468/mt overnight. Trading volume stood at 14,000 lots. Open interest stood at 280,000 lots. The most active SHFE 2310 copper contract prices opened at 69570 yuan/mt and finished at 69,640 yuan/mt overnight, up 0.49%, with the low-end of 69430 yuan/mt and the high-end of 69740 yuan/mt. Trading volume was 29,000 lots and open interest stood at 157,000 lots. On the macro front, the U.S. ADP added 177,000 new jobs in August, the smallest increase in five months and less than the expected 195,000. In addition, the U.S. Secretary of Commerce said he hopes U.S. companies will invest in China. In terms of fundamentals, the price spread between SHFE front-month and next-month copper contract expanded, and the market was optimistic over the market in September. Tight supply in east China pushed up spot quotes. Traders were more enthusiastic about stocking up at low prices and most of the trades occurred among traders. Copper inventories in south China have fallen for ten consecutive years, and sellers raised prices. However, downstream buying interest was weak at the end of the month, and the supply and demand were both weak. In terms of consumption, at the end of the month, companies were under financial pressure and their purchasing desire was not high. Combined with the impact of high copper prices, the overall demand was weak. In terms of price, U.S. economic data shows that U.S. inflation has been significantly alleviated, which, coupled with optimistic domestic macroeconomic sentiment will keep copper prices at high levels.

Aluminum

Overnight, the most-traded SHFE 2309 aluminium contract opened at 18,840 yuan/mt, with the lowest and highest prices at 18,830 yuan/mt and 19,035 yuan/mt before closing at 18,970 yuan/mt, up 250 yuan/mt or 1.34% from the previous trading day. LME aluminium opened at $2,172.5/mt on Wednesday with its high and low at $2,207/mt and $2,164.5/mt respectively before closing at $2,201.5/mt, an increase of $33/mt or 1.52% from the previous trading day.

On the macro side, frequent domestic favorable policies continued to weild boosting effects. In the fundemantals, with the upcoming arrival of the traditional peak season in September, market sentiment improved. And aluminum ingots inventory remained low, giving support to aluminum prices. Domestic aluminum market maintained a state of simultaneous increase in supply and demand. The proportion of molten aluminum output remained high while aluminum ingot production was limited. The influx of imported aluminum ingots after the import window opened and the release of Southwest capacity may impede destocking progress, but inventory accumulation amount won’t be large. Overall, the imbalance between supply and demand is not prominent. Aluminum prices may fluctuate upward this week. In the follows-up, market participators still need to pay attention to changes in domestic aluminum inventories and downstream recovery.

Lead

Overnight, LME lead prices opened at $2185.5/mt, with the high-end of $2213/mt, the highest in seven months. Prices closed at $2,171/mt, a decrease of 0.62%.

The most active SHFE 2310 lead contract prices opened at 16310 yuan/mt with the high-end of 16400 yuan/mt, and finally closed at 16325 yuan/mt, up 0.4%. Open interest were up 124 lots to 102,000 lots.

Zinc

The most active SHFE 2310 zinc contract prices opened at 20,925 yuan/mt last evening and reached at high of 20985 yuan/mt. Prices closed at 20,975 yuan/mt, up 230 yuan/mt, or 1.11%. The trading volume decreased by 13,832 lots to 142,000 lots, and the open interest increased 1,687 lots to 109,000 lots. A number of domestic policies were implemented. The overall terminal demand showed a certain degree of resilience. Many factors provided bottom support for zinc prices.

Tin

Yesterday, the ADP employment report for August in the United States showed 177,000 jobs, far below the market forecast of 195,000 and the previous value of 371,000. The market once again believes that the Federal Reserve may choose not to raise interest rates in November. As a result, the US dollar index fell, while non-ferrous metals generally rose. Overnight, SHFE 2309 tin contract price quickly pulled up after opening. Then it maintained a sideways trend, and rose before the night session was about to end and finally closed at 215,960 yuan/mt, up 1.24%.

Spot premiums and discounts changed little on August 30 morning. Small brand tin ingots were offered at premiums of 500 yuan/mt, and premiums of 100-600 yuan/mt for delivery brands, among which some enterprises with less inventory shipping at the premiums of 700 yuan/mt, premiums of 800-1,300 yuan/mt for Yunxi brand, and discounts of 400-300 yuan/mt for imported brands. Transactions were thin and worse than the previous day.

Nickel

SHFE 2309 nickel contract opened at 164,950 yuan/mt at the night session on August 30, and closed at 165,800 yuan/mt, up 850 yuan/mt. Trading volume dropped by 26,950 lots, and open interest decreased by 679 lots.

From a macro perspective, buyers need to pay attention to the USADP employment data, which is expected at 195,000, and the previous value was 324,000. A lower ADP will be negative for the US dollar and good for commodities. In the fundamentals, spot market transactions were depressed. Some upstream companies were eager to ship at lower premiums, but the downstream inventory was still at a high level due to previous purchases, causing downstream demand to be muted. So, nickel prices are expected to fluctuate in the future.