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SMM Evening Comments (Sep 18): Shanghai nonferrous metals rose across the board
Sep 18, 2020 18:09CST
SHFE nonferrous metals closed higher across the board on Friday September 18.

SHANGHAI, Sep 18 (SMM) — SHFE nonferrous metals closed higher across the board on Friday September 18.


Gold prices could rise even further and remain high “for longer than expected” as global uncertainties persist, said Yeoh Choo Guan, head of Asean global markets at Swiss banking giant UBS.


Lead was the best performer with a rise of 1.94%. Copper advanced 1.61%, aluminium edged up 0.83%, tin climbed 0.31%, zinc increased 1.78% and nickel went up 0.03%.


Inventories of steel rebar across Chinese steelmakers and social warehouses accelerated their declines this week, but the weekly average stock decline in September only stood at 80,000 mt, far lower than the 416,000 mt in the same period last year, as steel mills kept high production in this high season.


The ferrous complex also traded higher. Iron ore increased 1.58%, rebar rose 0.64%, and hot-rolled coil gained 0.98%.


Copper: The most-traded SHFE 2010 copper contract surged to an intraday high of 52,350 yuan/mt, before finishing the day 1.61% higher at 52,320 yuan/mt. It was announced last night that US first-time filings for jobless claims in the week ended September 12 stood at 860,000, which was lower than the previous week and the data were below one million for three consecutive weeks, but it was still more than four times that before the pandemic, indicating that the employment prospects are still unclear. In addition, the US also announced new homes starts for August and building permits for August, both of which were lower than expectations. The sluggish economic data in the US suppressed the US dollar and boosted copper prices. Saudi Arabia issued a warning last night, at the OPEC supervision meeting, to speculators who shorted crude oil, attacking the cheating behavior of quotas. That provided confidence to crude oil long positions, prompting crude oil prices to rise steadily and supporting copper prices. University of Michigan's Consumer sentiment index for September and 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 14,675 yuan/mt after opening and fluctuated between 14600-14650 yuan/mt in afternoon trading. The contract finished the day 0.83% higher at 14,640 yuan/mt. Open interest rose 1,228 lots to 122,000 lots. Low inventories and high basis support aluminium prices, and the capital inflow in the day actively increased its open interest. It needs higher capital participation for the contract to continue to rise.


Zinc: The most-active SHFE 2011 zinc contract rose to an intraday high of 20,025 yuan/mt and ended 1.78% higher at 20,015 yuan/mt today. Open interest rose 5,309 lots to 75,200 lots. The continuous downward trend of zinc ore processing fees led to the tight supply sentiment in Q4. Combined with the high consumption, the fundamentals of zinc provide upward momentum. The contract is expected to fluctuate at high levels tonight.


Nickel: The most-traded SHFE 2011 nickel contract closed up 0.03% at 116,710 yuan/mt today. Open interest fell 7,202 lots to 116,710 lots. Nickel ore inventories across all Chinese ports increased 43,000 wmt from September 11 to 8.95 million wmt as of September 18, showed SMM data.


Lead: The most-traded SHFE 2010 lead contract finished the day 1.94% higher at 15,210 yuan/mt. Open interest fell 4,353 lots to 18,866 lots. It should be noted that open interest of the SHFE 2011 Lead have reached 19,767 lots, exceeding that of the SHFE 2010 lead contract, and the main contract will be changed to the November contract next week. The sluggish consumption suppressed lead prices with stable support from the cost of secondary lead. The contract is expected to remain in choppy trading in the near term.


Tin: The most-liquid SHFE 2011 tin contract ended 0.31% higher at 143,750 yuan/mt today. Open interest rose 193 lots to 22,833 lots. Near the National Day holidays, the demand for downstream stockpiling will increase, and the dollar tend to drop, lowering the pressure above. Pressure above is expected to around 145,000 yuan/mt.


Evening comments

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