SMM Evening Comments (Sep 17): Shanghai nonferrous metals fell across the board

SHANGHAI, Sep 17 (SMM) – SHFE nonferrous metals fell across the board on Thursday September 17.

The Fed does not expect to see inflation pick up for years, and it is willing to keep rates at zero even after it does.

Stocks initially surged after the Fed released its post-meeting statement and its latest economic forecast, showing it will keep interest rates at zero at least through 2023, as expected. Stocks gave up their gains as Fed Chairman Jerome Powell briefed the media, and described the Fed’s guidance as strong and “powerful.”

Nickel led the losses and slumped 2.16%, copper slipped 0.93%, zinc eased 1.25%, lead lost 1.03%, tin went down 1.77% and aluminium decreased 0.28%.

SMM data showed that aluminium billet stocks across the five major consumption areas — Foshan, Wuxi, Huzhou, Changzhou and Nanchang — in China built up 4,000 mt from a week ago to 67,600 mt as of Thursday September 17.

The ferrous complex also traded lower. Hot-rolled coil fell 0.65%, rebar shed 0.28% and iron ore went down 2.71%.

Copper: The most-traded SHFE 2010 copper contract slid to an intraday low of 51,300 yuan/mt, before finishing the day 0.93% lower at 51,330 yuan/mt. The Federal Reserve (Fed) announced its interest rate resolution early this morning, indicating that it will maintain low interest rates for a long time, which is in line with market expectations. Powell said that at least the current level of asset purchase scale will be maintained, enhancing the market's confidence in the gradual recovery of the US economy. The US dollar index continued its upward trend in late yesterday, suppressing copper prices. Bank of England interest rate announcements, monetary policy meetings and whether contract could move above 40-day moving average will be watched tonight.

Aluminium: The most-liquid SHFE 2010 aluminium contract closed down 0.28% at 14,505 yuan/mt. Open interest fell 2,547 lots to 120,000 lots. The uncertainty of the demand end limited the upward room in the near term. Social inventories of primary aluminium ingots across eight consumption areas in China, including SHFE warrants, decreased 24,000 mt from a week ago to 740,000 mt as of Thursday September 17.

Zinc: The most-active SHFE 2010 zinc contract ended the day 1.25% lower at 19,685 yuan/mt. Open interest fell 537 lots to 79,274 lots. The contract fell for two consecutive days. The shortage of ore supply and the tension of winter stocks continue to expand. The contract is expected to stop falling and stabalise.

Nickel: The most-traded SHFE 2011 nickel contract finished the day 2.16% lower at 115,560 yuan/mt today. Open interest rose 3,806 lots to 123,277 lots. The contract will test whether it can stop falling if macro sentiment is boosted.

Lead: The most-traded SHFE 2010 lead contract fell to an intraday low of 14,805 yuan/mt in morning trading and finished the day 1.03% lower at 14,870 yuan/mt. Open interest fell 1,833 lots to 23,219 lots. Most large battery factories have completed the National Day stockpile, and the sluggish consumption suppressed lead prices, according to an SMM survey. The prices of battery scrap are unlikely to fall, supporting lead prices. The contract is expected to remain in choppy trading in the near term. The contract will test support from 14,800 yuan/mt tonight.

Tin: The most-liquid SHFE 2011 tin contract ended 1.77% lower at 141,690 yuan/mt today. Open interest rose 816 lots to 22,640 lots. Pressure below is expected to around 140,200 yuan/mt.