SMM Evening Comments (Sep 15): Shanghai Nonferrous Metals Closed Mixed with Digestion of the Bears

Published: Sep 15, 2022 18:00

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Shanghai nonferrous metals closed mixed as the pessimistic atmosphere did not continue to ferment when the Federal Reserve did not take a position on this higher-than-expected inflation.

SHANGHAI, Sep 15 (SMM) – Shanghai nonferrous metals closed mixed as the pessimistic atmosphere did not continue to ferment when the Federal Reserve did not take a position on this higher-than-expected inflation.

Shanghai copper fell 0.43%, aluminium gained 1.15%, lead rose 0.33%, zinc dropped 0.56%, tin added 1.39%, and nickel declined 0.39%.

Copper: The most-traded SHFE 2210 copper closed down 0.43% or 270 yuan/mt at 62,220 yuan/mt, with open interest down 4,656 lots to 152,790 lots.

On the macro front, after the US August inflation exceeded expectations, the market is anticipating more aggressive September interest rate hike. Copper prices are therefore under pressure. But the Federal Reserve did not take a position on this higher-than-expected inflation, and the market gradually digest this bearish factor, the pessimistic atmosphere did not continue to ferment.

In the spot market, the traders mostly quoted against SHFE 2209, and the quotes fell into a wider price range with violently fluctuating SHFE 2209 and 2210 spread. Market transactions were not active today. Most traders and downstream players did not participate in market trading today as it is the last trading day of SHFE 2209, and in light of extremely high premiums when quoting against SHFE 2210.

Aluminium: The most-traded SHFE 2210 aluminium closed up 1.15% or 215 yuan/mt to 18,880 yuan/mt, with open interest up 5,653 lots to 176,104 lots.

On the fundamentals, there is still the expectation that the production in Yunnan will be cut, and some local smelters said they have received production restriction notices to cut the production by 20%. The production in Sichuan has not yet fully recovered. The supply pressure eased amid constant production cuts, underpinning aluminium prices. Though the consumption has not improved in September, the momentum is firm and steady. In addition, aluminium social inventory was lower than the same period in previous years, and aluminium prices are well supported.

Lead: The most-traded SHFE 2210 lead closed up 0.33% or 50 yuan/mt at 15,050 yuan/mt, with open interest down 2,176 lots to 41,162 lots.

In the spot market, quotes from the smelters were mostly flat, and some hiked their prices after SHFE lead rose above 15,000 yuan/mt. But the overall transactions were lacklustre. The treatment capacity of lead-acid battery is greater than retiring speed, hence the cost of secondary lead was high amid short supply of scrap, offering firm support to lead prices. Lead prices are likely to remain rangebound in the mid to long term.

Zinc: The most-traded SHFE 2210 zinc closed down 0.56% or 140 yuan/mt at 24,675 yuan/mt, with open interest down 3,561 lots to 115,741 lots.

The premiums in Shanghai fell to 610 yuan/mt today, boosting the market transactions. Tight spot supply further supported zinc prices. Domestic apparent consumption was released in the afternoon, which shook the market confidence amid pessimism on the consumption side.

Tin: The most-traded SHFE 2210 tin closed up 1.39% or 2,420 yuan/mt at 176,830 yuan/mt, with open interest down 6,601 lots to 33,892 lots.

In the spot market, quotes from the smelters rose along with rising SHFE tin in morning trade, and some lowered the quotes as the sales were not smooth. The sources of non-deliverable brands from the traders were low, and the spot premiums fell slightly. The downstream players mostly purchased on rigid demand, and the purchasing demand was postponed in light of rising prices and approaching delivery of SHFE 2209. SHFE warrants inventory added 20 mt to 1757 mt today, and LME tin inventory rose 25 mt to 4,810 mt.

Nickel: The most-traded SHFE 2210 nickel closed down 0.39% or 740 yuan/mt at 189,050 yuan/mt, with open interest down 2,878 lots to 82,529 lots.

In the spot market, Jinchuan nickel was in premiums of 4,200-6,500 yuan/mt today, with an average of 5,350 yuan/mt and down 1,400 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 2,500-3,000 yuan/mt, with an average of 2,750 yuan/mt, down 350 yuan/mt on a daily basis. The transactions did not pick up though pure nickel premiums kept falling. Nickel briquette prices stood at 193,900-194,800 yuan/mt, up 2,550 yuan/mt on a daily basis.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]

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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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