SMM Morning Comments (Aug 26): Base Metals Prices Closed Mixed amid Cautious Market Ahead of Jackson Hole Meeting

SHANGHAI, Aug 26 (SMM) –Base metals prices closed mixed overnight.

SHFE copper dipped 0.16% on Wednesday evening; aluminium decreased 0.27%; lead fell 0.1%; zinc rose 0.18%; nickel advanced 0.56%; tin inched lower.

Copper: LME copper prices dropped 0.13% overnight; aluminium rose 0.61%; LME lead gained 0.79%.

LME copper prices dropped 0.13% overnight and closed at $9,345/mt. Trading volumes stood at 12,000 lots and open interest stood at 278,000 lots.

The most active SHFE 2110 copper contract closed at 69,160 yuan/mt overnight, a drop of 0.16%. Trading volumes stood at 46,000 lots and open interest stood at 130,000 lots.

On the macro front, US durable goods orders fell in July from June, and the recovery is still weak. The US dollar index closed flat after continued declines, and US Treasury yields rose. Jackson Hole’s annual central bank seminar will start on Thursday, and the market is awaiting the Fed’s attitude at this meeting. In the domestic spot market, downstream buying interest weakened noticeably as SHFE copper prices rebounded. Firm quotes by sellers sidelined downstream buyers.  SHFE copper prices are expected to move between 69,100-69,700 yuan/mt today, and LME copper will trade between $9,300-9,380/mt; spot premiums are likely to fluctuate between 130-210 yuan/mt.

Aluminium: The most-active SHFE 2110 aluminium contract decreased 0.27% to end at 20,545 yuan/mt last night. Three-month LME aluminium rose 0.61% to end at $2,620/mt on Wednesday. The most- active SHFE 2110 aluminium contract and spot aluminium prices hit a new high in the past 13 years due to output cut at aluminium plants in Yunnan, Guangdong and Inner Mongolia on power curtailment and dual control of energy consumption. Aluminium prices are expected to stand at 20,300-20,700 yuan/mt.

Lead: LME lead gained 0.79% to close at $2,310/mt on Monday.

The most-active SHFE 2109 lead contract fell 0.1% to close at 15,470 yuan/mt. The contract is likely to reach 15,550 yuan/mt today.

Zinc: LME zinc rose 0.18% to $3,014.5/mt, with open interest increasing 3,791 lots to 249,000 lots. Zinc stocks across LME-listed warehouses rose 225 mt to 239,525 mt overnight. The US dollar moved at a low level overnight, US Treasury yields rose, and US stocks hit new highs. LME zinc prices are expected to move between $2,980-3,030/mt today.

The most-traded SHFE 2110 zinc contract rose 0.18% to 22,575 yuan/mt last night, with open interest up 3,050 lots to 94,401 lots. SHFE zinc centre trended higher amid warm overseas sentiment. Spot trades thinned amid weak supply and demand. The upward room of zinc prices is expected to be limited due to expectations of government stockpiles. The most-traded SHFE 2110 contract is expected to move between 22,200-22,700 yuan/mt today, while spot premiums for domestic #0 Shuangyan will be seen at 150-170 yuan/mt against the September contract.

Nickel: The most active SHFE 2109 nickel contract advanced 0.56% to end at 144,440 yuan/mt last night. Fundamentals remain positive and prices are likely to exceed 145,000 yuan/mt today.

The most-traded SHFE 2109 tin contract fell from the peak of 244,750 yuan/mt, then fluctuated around 243,000 yuan/mt overnight. Tight supply situation is unlikely to be eased as spot supply tightened and SHFE and LME warrants continued to decline. Besides, power curtailment in south China is about to end and upstream costs hardly passed through to others, pressuring on prices. Prices have recently trended higher. Prices are expected to move between 240,000-245,000 yuan/mt today.