SHANGHAI, Sep 2 (SMM) – Shanghai base metals mostly went up on Friday morning after US dollar plummeted to a four-week low. At the same time, their counterparts on LME generally dropped.
LME metals basically cruised higher in the intraday as well as the overnight trading on Thursday. Copper rose 0.69%, aluminium increased 0.3%, lead edged up 0.68%, and zinc rose 0.39%.
SHFE metals trended mixed in the overnight trading. Copper gained 0.49%, lead rose 0.87%, aluminium fell 0.7%, and zinc slid 0.07%.
Copper: Three-month LME copper rose 0.69% to end at $9,400/mt on Thursday night, and is expected to trade between $9,380-9,460/mt today.
The most-traded SHFE 2110 copper contract gained 0.49% on Tuesday to close at 691,000 yuan/mt, and is expected to trade between 68,900-69,500 yuan/mt today, with spot premiums between 160-230 yuan,
The number of last week’s initial jobless claims was released last night fell to the lowest level since the outbreak of the pandemic. However, the risk appetite brought by the Fed’s dovish signal continued to pick up. The US dollar index fell to a four-week low overnight, giving some support to the copper futures. The market still lacks clear guidance from the macroeconomics. Investors hope that the non-farm payroll data to be released today may provide clues to the Fed's QE reduction. Spot prices fell below 70,000 yuan/mt. Downstream companies have purchased some national copper reserves for restocking, and the current social inventories have increased slightly. Buyers have more purchase choices. The expanding price spread between the September and October contracts should accelerate the position closing, but holders were reluctant to lower the prices. The premiums and trade may stagnate in the short term.
Aluminium: Three-month LME aluminium opened at $2,693/mt on Thursday morning and hit a high of $2,734.5/mt before closing at $2,701.5/mt, an increase of $8/mt or 0.3%.
The most-traded SHFE 2110 aluminium contract opened Thursday’s night session at 21,290 yuan/mt, with the highest and lowest prices at 21,385 yuan/mt and 21,240 yuan/mt before closing at 21,310 yuan/mt, down 150 yuan/mt or 0.7%.
US initial jobless claims hit a new low since the pandemic outbreak. Aluminium supply across many regions in China has been affected by energy consumption control policy. Aluminium ingot social inventory fell by 5,000 mt from a week ago to 749,000 mt on September 2. Market will continue to pay attention to energy consumption control policy and actual demand in the peak season. SHFE aluminium is expected to hover at highs on Friday.
Lead: Three-month LME lead opened at $2,274.5/mt last night, and edged up 0.68% to close at $2,297.5/mt. Today’s focus will be the pressure from the 40-day moving average.
The most-liquid SHFE 2101 lead contract increased 130 yuan/mt or 0.87% to end at 15,055 yuan/mt last night amid reduced short positions. SMM will monitor whether the prices will move above the 5-day moving average.
Zinc: Three-month LME zinc rose 0.39% to stand at $2,991.5/mt in the trading of last night. Zinc stocks across LME-listed warehouses stood at 236,246 mt, flat from yesterday. The number of people applying for unemployment benefits for the first time in the United States set a record low since the outbreak of Covid-19 pandemic. LME zinc prices are expected to move between $2,960-3,000/mt.
The most-traded SHFE zinc contract slid 0.07% to stand at 22,255 yuan/mt in overnight trading, with open interest up 422 lots to 99,584 lots. The overall downstream consumption was sluggish. Export orders in Ningbo trended higher, but other regions saw muted demand. Demand is likely to increase slightly due to high season expectations and pre-holiday restocking. The most-traded SHFE zinc contracts are expected to move between 22,000-22,400 yuan/mt today and spot premiums for domestic #0 Shuangyan zinc will be seen at 170-200 yuan/mt against the October contract.
Nickel: SHFE nickel prices ended at 146,710 yuan/mt on Thursday evening.
The current nickel fundamental issues are not significant. Nickel prices are expected to fluctuate rangebound but lower stainless steel prices are likely to weigh on nickel prices.
Tin: SHFE tin fell after opening Thursday’s night session, but then rallied slightly. Sellers in the spot market were eager to sell at discounts, but downstream buyers showed little interest in buying at high prices. SHFE and LME warrants showed divergent trend. The most-traded SHFE tin contract is expected to meet resistance at 248,500 yuan/mt and find support at 245,000 yuan/mt on Friday.