SMM Morning Comments (Sep 14): Shanghai base metals rose broadly ahead of the Fed’s policy meeting

SHANGHAI, Sep 14 (SMM) — Shanghai base metals were mostly higher on Monday morning, while their counterparts on the LME set for a mixed start, as investors await the US Federal Reserve’s policy meeting on September 15-16.  

Shanghai base metals, except for aluminium, closed higher on Friday night. Zinc rose 2.44% to lead the gains, copper added 0.66%, lead inched up 0.17%, nickel strengthened 1.69% and tin advanced 0.82%, while aluminium edged 0.07% lower.

The LME complex were mostly higher on Friday. Zinc jumped 3.11% to lead the way up, lead rose 0.93%, nickel increased 2.06% and tin edged 0.08% higher, while copper declined 1.24% and aluminium weakened 0.17%.

Copper: Three-month LME copper fell 1.24% to settle at $6,715/mt in choppy trading on Friday, and is expected to fluctuate between $6,670-6,750/mt today.  

The most-active SHFE 2010 copper contract bounced off a session low of 51,710 yuan/mt to a session high of 52,200 yuan/mt before paring some gains to end 0.66% higher at 51,960 yuan/mt on Friday night. The contract is likely to move between 51,600-52,100 yuan/mt today, while spot premiums are seen lower at 60-110 yuan/mt.

China’s financial data including newly-added social financing and new yuan-denominated loans issued by the central bank last Friday topped market expectations. Continuous ample liquidity provided traction to economic recovery, keeping copper prices at high levels. However, escalating US-China and China-India tensions deepened concerns among investors, which pressure copper prices. Copper prices are likely to fluctuate rangebound in the short term.

Aluminium: Three-month LME aluminium slid 0.17% to close at $1,775/mt in choppy trading on Friday, and is likely to move between $1,760-1,800/mt today.   

The most-liquid SHFE 2010 aluminium contract edged down 0.07% to end at 14,400 yuan/mt on Friday night. It is expected to trade between 14,200-14,500 yuan/mt today, while spot premiums are seen at about 20 yuan/mt.    

Zinc: Three-month LME zinc trended higher on Friday, and jumped 3.11% to settle at $2,472/mt after hitting an intraday high of 2,480/mt earlier in the session. Zinc stocks across LME-listed warehouses dipped 25 mt or 0.01% to 219,700 mt. Gradually-recovered overseas consumption boosted market sentiment, but the uncertainty of the coronavirus pandemic is likely to weigh on zinc prices. LME zinc is expected to move between $2,430-2,480/mt today.  

The most-traded SHFE 2010 zinc contract cruised higher with LME zinc on Friday night, rising 2.44% to close at 19,740 yuan/mt. In terms of fundamentals, zinc inventories extended declines as consumption was robust in a traditional high season, providing strong support to zinc prices, but a surge in smelter production will dampen market sentiment. The October contract is likely to trade between 19,400-19,900 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen slightly lower at 200-220 yuan/mt against the September contract.

Nickel: The most-active SHFE 2011 nickel contract touched a session high of 118,000 yuan/mt before relinquishing some gains to close 1.69% firmer at 117,910 yuan/mt on Friday night. Whether the contract could steady above 118,000 yuan/mt today will be monitored.    

Lead: Three-month LME lead bounced off an intraday low of $1,870.5/mt to an intraday high of $1,902.5/mt before giving up some gains to end 0.93% higher at $1,891.5/mt on Friday.  

The most-active SHFE 2010 lead contract rebounded from a session low of 14,830 yuan/mt to a session high of 15,055 yuan/mt before paring some gains to close 0.17% firmer at 14,950 yuan/mt on Friday night. Support from downstream consumption to lead prices will come under scrutiny.  

Tin: Three-month LME tin edged up 0.08% to close at $17,990/mt on Friday, after hitting its lowest in more than two weeks at $17,835/mt earlier in the session. It is expected to trade between $17,820-18,100/mt today.

The most-liquid SHFE 2011 tin contract climbed to a session high of 144,100 yuan/mt before erasing some gains to end 0.82% higher at 143,840 yuan/mt on Friday night. Pressure above will be seen from the 40-day moving average of 144,500 yuan/mt today.