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SMM Morning Comments (Sep 9): Most Base Metals Cruised Higher amid Slower Economic Growth
Sep 9,2021 09:59CST
SMM Comments
Source:SMM
Shanghai base metals basically trending higher across the board on Thursday morning after Fed’s Beige Book indicated the slower US economic growth and growing inflation rate. Meanwhile, their counterparts on LME trended mixed.

SHANGHAI, Sep 9 (SMM) – Shanghai base metals basically trending higher across the board on Thursday morning after Fed’s Beige Book indicated the slower US economic growth and growing inflation rate. Meanwhile, their counterparts on LME trended mixed.

LME metals mostly closed higher in the intraday or overnight trading on Thursday. Aluminium rose 0.83%, lead gained 0.11%, zinc increased 0.49%, and copper dropped 0.72%.

SHFE metals performed similarly last night. Aluminium rose 1.07%, lead edged up 1.04%, zinc increased 0.4%, and copper fell 0.67%.

Copper: Three-month LME copper dropped 0.72% on Wednesday night to close at $9,269.5/mt, and is expected to trade between $9,210-9,300/mt today. The open interest reached 265,000 lots.

The most-traded SHFE 2110 copper contract edged down 0.67% last night to close at 68,500 yuan/mt, and is expected to trade between 68,000-68,600 yuan/mt today, with spot premiums between 20-80 yuan/mt. Open interest reached 122,000 mt.

The Fed’s Beige Book released last night pointed out that from early July to August, US economic growth slowed slightly to a moderate level. The inflation rate is in a steady upward trend. Fed officials reiterated their statements about the start of debt purchase reduction this year, driving the US dollar index to rebound and suppress copper prices.

Spot premiums rebounded yesterday after the panic selling in the previous trading day. Traders and downstream buyers increased purchase at the prices around the equal level of futures. Sellers refuse the transactions at discounts currently, and the prices are still profitable and attractive to long-term order buyers. However, since the BACK structure changes little, the premiums are hard to rebound to over 100 yuan/mt before the contract settlement.

Aluminium: Three-month LME aluminium opened at $2,765/mt on Wednesday morning and ranged between $2,758-2,810/mt before closing at $2,791/mt, an increase of $23/mt or 0.83%. Trading volume was 18,734 lots, and open interest decreased by 5,410 lots to 646,000 lots.

The most-traded SHFE 2110 aluminium contract opened Wednesday’s night session at 21,950 yuan/mt, and hit a high of 22,240 yuan/mt before closing at 22,170 yuan/mt, up 235 yuan/mt or 1.07%. Open interest increased by 1,182 lots to 295,000 lots. 

Aluminium supply in Guangxi and Inner Mongolia is still affected by energy consumption control policy. Market will continue to pay attention to energy consumption control policy, inventory changes and actual demand in the peak season. SHFE aluminium is expected to hover at highs on Thursday.

Lead: Three-month LME lead gained 0.11% to end at $2,271.5/mt last night amid falling stocks. Lead stocks across LME-listed warehouses fell 100 mt from the previous day to 52,375 mt as of September 8. LME lead gradually moved upward and closer to the Bollinger Middle Rail, testing the 60-day moving average in the intraday trading.

The most active SHFE 2110 lead contract opened high at 14,920 in the overnight trading yesterday, and hit the highest level at 15,085 yuan/mt as shorts intensively reduced positions. Then the prices fluctuated above 15,000 yuan/mt and closed at 15,025 yuan/mt, up 1.04% from the previous night. Open interest decreased by 5,282 lots to 88,661 lots.

Zinc: Three-month LME zinc opened at $3,040/mt on Wednesday and hit the highest since mid-June at $3,088/mt before closing at $3,052.5/mt, up $15/mt or 0.49%. Trading volume rose to 11,000 lots, and open interest increased by 2,657 lots to 257,000 lots. LME zinc inventory decreased by 1,700 mt to 231,400 mt, a decrease of 1.13%. LME zinc is expected to move at $3,030-3,070/mt on Thursday.

SHFE zinc opened at 22,695 yuan/mt during Wednesday’s night session and rose to 22,980 yuan/mt before closing at 22,720 yuan/mt, up 90 yuan/mt, or 0.4%. Trading volume increased to 190,000 lots, and the open interest increased by 10,923 lots to 180,000 lots. Domestic zinc production in September is estimated to increase by 11,800 mt from the previous month. This, together with the 50,000 mt of zinc ingot reserves from the SRB, will shift the domestic market to oversupply. It is expected that domestic stocks will accumulate after SRB cargoes are delivered to downstream plants, putting pressure on domestic prices. SHFE zinc is expected to move within a wide range of 22,500-22,800 yuan/mt in the short term. 0# domestic Shuangyan zinc will trade at premiums of 180-200 yuan/mt over the SHFE 2110 zinc contract.

Tin: SHFE tin rose to 247,350 yuan/mt during Wednesday’s night session, but then pulled back. Output of upstream smelters rose in August and tin ingot import window has opened. Demand from the electronics industry will grow as the traditional off-season has ended. As such, the short-term supply and demand are basically balanced. The most-traded SHFE tin contract is expected to meet resistance at 247,500 yuan/mt and find support at 244,000 yuan/mt on Thursday.

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