SMM Morning Comment For SHFE Base Metals September 6

SHANGHAI, Sep 6 (SMM) –

Copper

LME copper prices opened at $8422.5/mt and closed at $8473/mt in overnight trading, a gain of 0.27%, with the low-end of $8416/mt and the high-end of $8496.5/mt. Trading volume was 17,000 lots, and open interest stood at 281,000 lots. The most active SHFE 2310 copper contract prices opened at 69410 yuan/mt and closed at 69740 yuan/mt last evening, up 0.58%, with the low-end of 69410 yuan/mt and the high-end of 69740 yuan/mt. Trading volumes stood at 37,000 lots and open interest stood at 160,000 lots. On the macro front, Fed Governor Waller said recent data did not indicate the Fed needed to take immediate action. Additionally, Treasuries fell as a handful of companies flooded the market with trillions of dollars in bonds ahead of key economic data and a Federal Reserve interest rate decision this month. In terms of fundamentals, the inflow of imported copper has put pressure on the spot quotes in east China. The backwardation structure between the SHFE front-month and next-month contracts made traders to keep prices firm, but spot quotes in east China still shifted downwards yesterday. Inventories in south China have increased for four consecutive days. Sellers continued to lower quotes. The overall transaction was still poor. Copper prices are expected to have limited upside room in the near term.

Aluminum

Overnight, the most-traded SHFE 2310 aluminium contract opened at 18,980 yuan/mt, with the lowest and highest prices at 18,965 yuan/mt and 19,080 yuan/mt before closing at 18,995 yuan/mt, up 15 yuan/mt or 0.08% from the previous trading day. LME aluminium opened at $2,200.5/mt on Tuesday with its high and low at $2,212/mt and $2,181/mt respectively before closing at $2,192/mt.

On the macro side, domestic favorable policies wield boosting effects on markets significantly. But the vacillating attitude of Europe and the Fed to raise interest rates added to macro uncertainty. In the fundamentals, recent concentrated arrivals of aluminum ingots increased social inventory accumulation, weakening the support for aluminum prices. The short-term aluminum price is expected to move upward, but it is necessary to closely observe the consumption changes in the peak season.

Lead

LME lead prices opened at $2209/mt and closed at $2225/mt last evening, up $23/mt or 1.04%, with the low-end of $2192.5/mt and the high-end of $2243/mt.

The most active SHFE lead contract prices opened at 16575 yuan/mt and rose 220 yuan/mt or 1.33% to close at 16765 yuan/mt last evening, with the low-end of 16865 yuan/mt. Open interest increased 2151 lots to 95,000 lots.

Zinc

LME zinc prices opened at $2470.5/mt last evening and closed down $2/mt or 0.08% at $2464.5/mt. Trading volume rose to 7074 lots, and open interest decreased by 1812 lots to 199,000 lots. LME zinc inventories shed by 2000 mt to 151575 mt.

The most active SHFE 2310 zinc contract prices opened at 21240 yuan/mt and closed at 21300 yuan/mt last evening, up 120 yuan/mt or 0.57%. The trading volume was down to 69465 lots, and open interest decreased 1853 lots to 104,000 lots. Federal Reserve officials said that the latest round of economic data provided the Fed with space to carefully consider whether it needs to raise interest rates again. The upside risk of inflation still exists. The US dollar index rose to a near 6-month high. Domestically, the positive macro information that has been continuously released recently still has a certain support on the market.

Tin

Overnight, SHFE 2310 tin contract price increased slightly to 223,610 yuan /mt after opening, but then fell back to 221,040 yuan/mt . The price finally closed at 222,800 yuan/mt, up 0.82%.

Spot premiums and discounts weakened slightly on September 5 morning. Small brand tin ingots were offered at premiums of 0-300 yuan/mt, and premiums of 300-500 yuan/mt for delivery brands, premiums of 800-1,100 yuan/mt for Yunxi brand, and discounts of 300-200 yuan/mt for imported brands. Downstream purchases were sluggish yesterday.

Nickel

The most traded SHFE nickel contract opened at 169,780 yuan/mt and closed at 170,710 yuan/mt at the night session on September 4, an increase of 2,510 yuan/mt from the previous trading day. The trading volume and the open interest increased by 75,681 lots and 4,181 lots respectively.

The US ADP employment data released last Wednesday night and the August jobless rate released on Friday night both indicate that the current US economy is not resilient enough, which may influence the Fed’s interest rate hike process in September. In terms of fundamentals, MHP prices fluctuated upward under the dual support of domestic supply shortage and Indonesian nickel ore export quota issue. Trades in spot market remained thin yesterday. In summary, nickel prices may be volatile in the future.