SMM Evening Comments (Sep 7): Shanghai nonferrous metals ended mixed as dollar firmed

SHANGHAI, Sep 7 (SMM) – SHFE nonferrous metals closed mixed on Monday September 7 as dollar strengthened and shares of SMIC, China’s biggest contract chipmaker, plunged over 23% on Monday, after the U.S. government said it was considering putting export restrictions on the company.

China’s dollar-denominated exports beat expectations to rise 9.5% for the month of August from a year ago, data from the country’s General Administration of Customs showed on Monday. Meanwhile, China’s dollar-denominated imports in August fell 2.1% from a year ago.

Copper, the best performer, rose 1.63%, aluminium advanced 1.37% and lead climbed 0.35%, while zinc edged down 0.68%, nickel weakened 0.04% and tin shed 0.07%.

SMM data showed that social inventories of refined zinc ingots across Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Shandong and Hebei decreased 7,200 mt from September 4 to 171,200 mt as of September 7. The stocks were down 8,100 mt from last Monday August 31.

The ferrous complex closed mixed. Hot-rolled coil fell 1.25%, rebar shed 0.59%, while iron ore advanced 0.29%.

Copper: The most-traded SHFE 2010 copper contract surged to a session high of 52,840 yuan/mt after the opening bell, and closed 1.63% higher at 52,240 yuan/mt today. The US nonfarm payrolls in August stood at 1.37 million, which was less than the expected 1.35 million, but the unemployment rate dropped below 10% for the first time since March, coming in at 8.4%, which confirmed that the economic recovery is still advancing continuously with investors' optimism, supporting copper prices. However, the US dollar index stopped falling and rebounded, and US stocks weakened sharply, which also impacted investor confidence and suppressed copper prices. Whether the contract could maintain its upward trend will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2010 aluminium contract climbed to an intraday high of 14,550 yuan/mt and closed up 1.37% at 14,480 yuan/mt today. Open interest fell 2,459 lots to 122,000 lots. Open interests and the basis will be monitored.

Zinc: The most-active SHFE 2010 zinc contract fell to an intraday low of 19,710 yuan/mt in afternoon trading, before rebounding to finish the day 0.68% lower at 19,805 yuan/mt. The contract generated a V-shaped movement on Monday. Open interest fell 2,476 lots to 95,178 lots. The limit of environmental protection is gradually easing, and the consumption is expected to enter the peak season. The contract is expected to move around short moving average tonight.

Nickel: The most-traded SHFE 2011 nickel contract closed down 0.04% at 119,080 yuan/mt today. Open interest fell 1,265 lots to 146,827 lots. Whether the contract could move above 120,000 yuan/mt will be monitored tonight.

Lead: The most-traded SHFE 2010 lead contract climbed to an intraday high of 15,655 yuan/mt after the opening bell, and finished the day 0.35% higher at 15,580 yuan/mt. Open interest fell 344 lots to 26,446 lots. NWhether the contract could move above 40-day moving average of 15,650 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2011 tin contract rose to an intraday high of 147,420 yuan/mt after opening as investors added their long positions and ended 0.07% lower at 145,630 yuan/mt today. Open interest fell 250 lots to 22,072 lots. Pressure below is expected to around 10-day moving average of 144,800 yuan/mt.