SMM Evening Comments (Sep 9): Shanghai Nonferrous Metals Closed with Broad Gains as US Dollar Index Fell after Rising for Three Consecutive Days

SHANGHAI, Sep 9 (SMM) – Shanghai nonferrous metals all finished in the positive territory as the US dollar index moved down after rising for three days in a row.

Shanghai copper rose 0.49%, aluminium surged 2.95%, lead added 0.47%, zinc advanced 1.46%, tin soared 2.32%, and nickel climbed 2.80%.

Copper: The most-traded SHFE 2110 copper closed up 0.49% or 340 yuan/mt to 69300 yuan/mt, with open interest up 2593 lots to 123100 lots.

On the macro front, July balance of trade for Germany was far better than estimate due to expanding trade surplus in the month. Export of Germany grew greatly on the month, but import weakened, and both managed gains of 1.6% and 5.9% from the pre-pandemic level, warming up market sentiment further.

Tonight, the market shall watch the meeting of European Central Bank. If topics of tapering were mentioned at the meeting, copper prices are likely to trend down.

Aluminium: The most-traded SHFE 2110 aluminium closed up 2.95% or 645 yuan/mt to 22475 yuan/mt, with open interest down 1281 lots to 292263 lots. On the fundamentals, aluminium output stood at 3.23 million mt in August according to SMM, up 1.13% on the year. Disruptions to the supply side sustained, such as intensified production restrictions in Guangxi and Xinjiang.

Meanwhile, SMM data showed that China's social inventories of aluminium across eight consumption areas rose 2,000 mt on the week to 751,000 mt as of September 9. Increases were mostly contributed by Nanhai due to added arrivals of imported aluminium and ingots from north-west China. Inventories in Wuxi and Gongyi continued to fall.

Lead: The most-traded SHFE 2110 lead closed up 0.47% or 70 yuan/mt to 14940 yuan/mt, with open interest down 7060 lots to 86886 lots.

Intraday SHFE lead prices rallied. Secondary lead smelters discounts were basically unchanged, but there were still a few of them making deliveries to hold prices firm. The market mainly took a wait-and-see stance, and transaction was light.

Zinc: The most-traded SHFE 2110 zinc closed up 1.46% or 330 yuan/mt at 22960 yuan/mt, with open interest up 10528 lots to 116208 lots. On the fundamentals, the third batch of government reserves is expected to make up some of the losses in output.

Tin: The most-traded SHFE 2110 tin closed up 2.32% at 250740 yuan/mt, with open interest up 3348 lots.

On the fundamentals, market supply is expected to be sufficient as tin ingot output in August rose, and the market favoured import other than export. The key to determine the follow-up price trending lies in the digestion capability of the demand side after downstream electronics sector walked out the seasonal low.

Nickel: The most-traded SHFE 2110 nickel closed up 2.80% or 4110 yuan/mt at 150750 yuan/mt, with open interest up 10427 lots to 151341 lots. Nickel prices were strongly supported by the fundamentals. Demand from the new energy sector remained robust, though stainless steel sent out bearish signals amid news about output cut. Disclosed global inventory of pure nickel stayed at a comparatively low level, supporting nickel futures.