SMM Evening Comments (Sep 20): Shanghai Nonferrous Metals Closed ahead of US Rate Resolution

Published: Sep 20, 2022 18:00 (GMT+8)

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Shanghai nonferrous metals closed mixed as the market players are cautious and awaited the US rate resolution.

SHANGHAI, Sep 20 (SMM) – Shanghai nonferrous metals closed mixed as the market players are cautious and awaited the US rate resolution.

Shanghai copper inched up 0.05%, aluminium fell 1.06%, lead gained 0.27%, zinc dropped 0.41%, tin slid 1.19%, and nickel rose 0.91%.

Copper: The most-traded SHFE 2210 copper closed up 0.05% or 30 yuan/mt at 62,600 yuan/mt, with open interest down 7,242 lots to 133,173 lots.

On the macro front: (1) US September NAHB Housing Market Index stood at 46, with a previous value of 49 prior and a forecast of 47. (Bullish ☆) (2) The annualised rate of Japan August core CPI stood at 2.8%, with a previous print of 2.40% and a forecast of 2.70%. (Bullish ☆).

In the spot market spot SMM #1 copper cathode was in premiums of 720-780 yuan/mt over SHFE 2210, with an average of 750 yuan/mt, down 75 yuan/mt over last Friday. The circulation of cargoes among downstream players and traders has been hindered by high premiums and wide backwardation structure between SHFE 2210 and 2211.

Aluminium: The most-traded SHFE 2210 aluminium closed down 1.06% or 200 yuan/mt to 18,650 yuan/mt, with open interest down 7,961 lots to 156,245 lots.

In the spot market, spot discounts in east China stood at 50 yuan/mt over SHFE 2210, and the discounts in Gongyi were 110 yuan/mt over SMM A00 aluminium price. On the whole, the downstream demand has not improved despite the seasonal high, and the buyers were cautious and purchased mainly on rigid demand amid bears on the macro front and uncertain supply cuts.

Lead: The most-traded SHFE 2210 lead closed up 0.27% or 40 yuan/mt at 14,910 yuan/mt, with open interest down 4,612 lots to 43,662 lots.

In the spot market, spot premiums offered by the smelters changed little from yesterday, and the downstream demand was slightly suppressed by rising lead prices. Nonetheless, the demand for lead-acid battery is expected to pick up as the peak season is still in place. The market players shall watch if the contract could remain above 14,900 yuan/mt tonight.

Zinc: The most-traded SHFE 2210 zinc closed down 0.41% or 100 yuan/mt at 24,505 yuan/mt, with open interest down 5,442 lots to 97,323 lots.

On the fundamentals, the arrivals in the market was delayed by the spreading covid, and the spot supply was relatively tight. On the other hand, the futures market was in a stalemate as the market players were high sensitive ahead of the US rate meeting.

Tin: The most-traded SHFE 2210 tin closed down 1.19% or 2,140 yuan/mt at 177,180 yuan/mt, with open interest down 2,376 lots to 29,037 lots.

In the spot market, the quotes from the smelters were stable in early trade, while a few smelters were firm to their prices. Some traders reported tight sources of some non-deliverable brands, and the spread among different brands was narrow. The transactions in the spot market were muted by noon, and picked up in the afternoon after the prices dropped. SHFE warrants inventory fell 100 mt to 1,567 mt, and LME tin stocks lost 20 mt to 4,830 mt.

Nickel: The most-traded SHFE 2210 nickel closed up 0.91% or 1,750 yuan/mt at 195,010 yuan/mt, with open interest down 6,750 lots to 77,822 lots.

In the spot market, Jinchuan nickel was in premiums of 4,000-5,500 yuan/mt today, with an average of 4,750 yuan/mt, down 900 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 2,000-2,600 yuan/mt, with an average of 2,300 yuan/mt, down 350 yuan/mt on a daily basis. Pure nickel spot premiums kept falling, but the futures prices were still high, suppressing market transactions. For nickel briquette, the prices stood between 197,000-197,500 yuan/mt, up 2,500 yuan/mt from a day ago.

[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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