SMM Evening Comments (Sep 29): Shanghai nonferrous metals rose across the board for the 2nd day

Published: Sep 29, 2020 17:32 (GMT+8)

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SHFE nonferrous metals closed higher across the board on Tuesday September 29, extending increases from the prior day as the US dollar index extended its decline, and the US stock market maintained its upward trend overnight, leading to a decrease in the safe-haven demand of the US dollar and suppressing the US dollar.

SHANGHAI, Sep 29 (SMM) — SHFE nonferrous metals closed higher across the board on Tuesday September 29, extending increases from the prior day as the US dollar index extended its decline, and the US stock market maintained its upward trend overnight, leading to a decrease in the safe-haven demand of the US dollar and suppressing the US dollar.

In Europe, the U.K. and the European Union have indicated that a Brexit deal is still some way off after negotiations recommenced Monday over implementing their Withdrawal Agreement, which British Prime Minister Boris Johnson’s government has sought to renege on.

Lead was the best performer with a rise of 2.6%. Copper advanced 0.1%, Aluminium edged up 1.65%, tin climbed 2.39%, zinc increased 2.33% and nickel went up 1.1%.

A total of 104 vessels carrying 15.01 million mt of iron ore arrived at major Chinese ports during September 20-26, SMM estimates. This was up 2.81 million mt from the previous week. The amount of arrivals in Shandong and Tangshan both increased week on week, with arrivals in Shandong rising more than 50%.

The ferrous complex also traded higher. Iron ore advanced 1.43%, rebar rose 0.14%, and hot-rolled coil climbed 0.22%.

Copper: The most-traded SHFE 2011 copper contract slid to an intraday low of 50,900 yuan/mt, before finishing the day 0.1% higher at 50,940 yuan/mt. It is still difficult for the Democratic Party of the US to launch a new round of 2.2 trillion fiscal stimulus plan in the near term, and investors are more cautious because of their worries about the US election situation and the prospect of sustained economic recovery. Whether the contract could move above 51,500 yuan/mt will come under scrutiny.

Aluminium: The most-liquid SHFE 2011 aluminium contract finished the day 1.65% higher at 14,205 yuan/mt. Open interest fell 8,884 lots to 107,188 lots. The influence of macro factors such as the US election, changes in US stocks and US-China tensions on market sentiment will be monitored. Imports of aluminium scrap stood at 72,000 mt in August, decreasing 22.2% from July and down 48.9% from a year earlier, according to the latest customs data.

Zinc: The most-active SHFE 2011 zinc contract ended 2.33% higher at 19,355 yuan/mt today. Open interest fell 2,631 lots to 88,237 lots. The tight supply of zinc ore may lead to the decline in smelters profits and dampen the enthusiasm of smelters for production. The improved after-market consumption support zinc prices. The contract is expected to fluctuate rangebound in the near term. The first debate in American election is about to kick off, and the macro risks should be monitored.

Nickel: The most-traded SHFE 2012 nickel contract closed up 1.1% at 113,850 yuan/mt today. Open interest fell 2,666 lots to 98,031 lots. The macro factors under the influence of overseas pandemic situation suppressed nickel price. The contract is expected to fluctuate weakly in the near term.

Lead: The most-traded SHFE 2011 lead contract climbed to an intraday high of 15,230 yuan/mt this afternoon, before recouping some gains to finish the day 2.6% higher at 15,200 yuan/mt. Open interest rose 426 lots to 23,571 lots. Whether the contract could move above 20-day moving average of 15,200 yuan/mt will be watched tonight.

Tin: The most-liquid SHFE 2012 tin contract rose to an intraday high of 143,460 yuan/mt and ended 2.39% higher at 143,300 yuan/mt today. Open interest fell 1,112 lots to 23,467 lots. Pressure above is expected to around 60-day moving average of 144,000 yuan/mt.

Evening comments Copper Aluminium Lead Nickel Zinc Tin

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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