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SMM Morning Comments (Sep 2): Shanghai base metals were mostly lower on dollar bounce-back
Sep 2,2020 10:14CST
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Source:SMM
Shanghai base metals traded lower for the most part on Wednesday morning, and nonferrous metals on the LME fell across the board, as the dollar index returned above 92 as US ISM manufacturing PMI for August recorded a new high since 2019.

SHANGHAI, Sep 2 (SMM) — Shanghai base metals traded lower for the most part on Wednesday morning, and nonferrous metals on the LME fell across the board, as the dollar index returned above 92 as US ISM manufacturing PMI for August recorded a new high since 2019.

 

Oil prices were higher in the morning of Asian trading hours, after a larger-than-expected draw in US crude stockpiles and as upbeat US factory data raised optimism of a post-pandemic economic recovery, bolstering risk appetite among investors. 

US crude inventories fell by 6.4 million barrels in the week ended Aug 28 to about 501.2 million barrels, the American Petroleum Institute (API) said, compared with analysts’ expectations for a draw of 1.9 million barrels.

Gasoline stocks also fell by 5.8 million barrels, more than analysts’ estimates of a draw of 3.0 million barrels.

 

On the SHFE, nonferrous metals, except for copper and aluminium, closed higher in overnight trading. Zinc added 0.77%, lead advanced 0.41%, nickel firmed 0.2 and tin rose 0.56%, while copper fell 0.65% and aluminium declined 0.93%.

Their counterparts on the LME rose across the board on Tuesday. Tin jumped 2.11% to lead the way up, zinc increased 1.47%, aluminium firmed 1.14%, nickel strengthened 1.44%, copper added 0.13% and lead edged up 0.05%.

 

Copper: Three-month LME copper inched up 0.13% to settle at $6,683/mt on Tuesday, with open interest decreasing 3,858 lots to 323,000 lots. It is expected to move between $6,680-6,740/mt today.

The most-active SHFE 2010 copper contract fell 0.65% to end at 52,110 yuan/mt in overnight trading. It is likely to trade between 52,100-52,600 yuan/mt today, while spot premiums are seen higher at 50-120 yuan/mt.

Overnight, the dollar index, which tracks the greenback against a basket of major currencies, returned above 92 as US ISM manufacturing PMI for August recorded a new high since 2019, which forced copper prices to give up earlier gains. But copper prices are expected to strengthen in the short term amid upbeat macroeconomic environment.   

 

Aluminium: Three-month LME aluminium rose 1.14% to end at $1,818.5/mt on Tuesday, and it is expected to fluctuate at high levels today amid the weak US dollar index.

The most-liquid SHFE 2010 aluminium contract trended lower in overnight trading, falling 0.93% to close at 14,435 yuan/mt. Market sentiment and changes in inventories will be monitored. The October contract is likely to move between 14,300-14,600 yuan/mt today, while spot premiums are seen at 10-30 yuan/mt.

 

Zinc: Three-month LME zinc rose 1.47% to close at $2,553/mt on Tuesday, after hitting its highest in more than one year at $2,583/mt earlier in the session. Zinc stocks across LME-listed warehouses edged up 175 mt or 0.08% to 220,125 mt. Expectations of US fiscal stimulus measures and robust manufacturing data boosted zinc prices. LME zinc is expected to move between $2,540-2,590/mt today.  

The most-traded SHFE 2010 zinc contract dropped from an intraday high of 20,440 yuan/mt to end 0.77% higher at 20,330 yuan/mt in overnight trading. In terms of fundamentals, domestic smelters stepped up production as rising treatment charges (TCs) lifted profits, and downstream consumption is expected to improve during September-October, a traditional high season. The October zinc contract is likely to trade between 20,000-20,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen stable at 90-100 yuan/mt against the September contract.  

 

Nickel: The most-active SHFE 2011 nickel contract trended lower in overnight trading, edging up 0.2% to close at 121,980 yuan/mt, with open interest falling 9,154 lots to 172,000 lots. Pressure above will be seen from the 123,000 yuan/mt mark.

 

Lead: Three-month LME lead climbed to a session high of $2,014/mt on Tuesday, before paring some gains to settle just 0.05% higher at $1,974.5/mt.   

The most-active SHFE 20010 lead contract opened at a session high of 16,055 yuan/mt in overnight trading, and settled 0.41% higher at 15,880 yuan/mt. The effect of implementation of the new law on prevention and control of solid waste pollution on domestic lead prices will come under scrutiny.  

 

Tin: Three-month LME tin jumped 2.11% to close at $18,150/mt on Tuesday, after hitting an intraday high of $18,240/mt earlier in the session. Pressure above will be seen from $18,300/mt today.  

The most-liquid SHFE 2011 tin contract settled 0.56% firmer at 146,140 yuan/mt in overnight trading. Pressure above will be seen at around 146,500 yuan/mt.  

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