SMM Evening Comments (Sep 21): Shanghai Nonferrous Metals Closed Mostly with Gains with Rising Energy Prices

SHANGHAI, Sep 21 (SMM) – Shanghai nonferrous metals closed mostly with gains as rising crude oil and natural gas prices offered some support to nonferrous metals prices. But the market participants were still cautious ahead of the US rate resolution.

Shanghai copper jumped 0.45%, aluminium fell 0.27%, lead gained 0.4%, zinc advanced 0.67%, tin gained 2.66%, and nickel rose 3.9%.

Copper: The most-traded SHFE 2210 copper closed up 0.45% or 280 yuan/mt at 62,760 yuan/mt, with open interest down 1,396 lots to 131,777 lots.

On the macro front: (1) US API crude oil inventories in the week of September 16 stood at 1.035 million barrels, with a previous value of 6.035 million barrel and a forecast of 2.321 million barrels. (Bullish ☆) (2) The annualised rate of U.S. August total new housing starts stood at 1.575 million, with a previous value of 1.404 million and a forecast of 1.445 million. (Bearish ☆)

In the spot market, the sellers began the day with premiums of 600-620 yuan/mt, but fell quickly to 560 yuan/mt as the sellers of good-quality copper were in need of cash. The premiums fell further to 550 yuan/mt after SHFE copper gained 200 yuan/mt. But the transactions were still muted. The premiums of good-quality copper were around 570-580 yuan/mt.

Aluminium: The most-traded SHFE 2210 aluminium closed down 0.27% or 50 yuan/mt to 18,670 yuan/mt, with open interest down 11,264 lots to 144,981 lots.

In the spot market, spot cargoes in east China were in discounts of 50 yuan/mt over SHFE 2210, and showed signs of expanding with poor sales. Spot discounts in Gongyi were 80 yuan/mt over SMM A00 aluminium price. But the downstream still purchased on rigid demand as the pre-National Day holiday restocking has not yet started. On the whole, the potentially expanding production cuts in Yunnan province have not yet been confirmed, and the market players were more wait-and-see ahead of US rate resolution.

Lead: The most-traded SHFE 2210 lead closed up 0.4% or 60 yuan/mt at 14,960 yuan/mt, with open interest down 3,466 lots to 40,196 lots.

In the spot market, the seasonal high on the consumption side has not yet ended, and the downstream companies purchased actively on dips for the upcoming National Day holiday. Falling social inventory boosted lead prices. The transactions of base metals were generally targeting risk aversion.

Zinc: The most-traded SHFE 2210 zinc closed up 0.67% or 165 yuan/mt at 24,720 yuan/mt, with open interest down 2,256 lots to 95,067 lots.

On the fundamentals, the supply and demand balance remained unchanged, and the high spot premiums due to tight supply offered some support to zinc prices. Rising crude oil and natural gas prices today offered some support as well.

Tin: The most-traded SHFE 2210 tin closed up 2.66% or 4,730 yuan/mt at 182,400 yuan/mt, with open interest up 684 lots to 29,721 lots.

In the spot market, the quotes from smelters fell into a narrow range in early trade, except for a few smelters that did not quote. According to the traders, the supply of the brand Yunxi rose with the delivery of SHFE 2209, and the spread between different brands was still narrow. The spot market trade was muted, and some traders lowered the premiums to promote the sales. The downstream demand was slightly suppressed by rising prices.

Nickel: The most-traded SHFE 2210 nickel closed up 3.9% or 7,590 yuan/mt at 202,000 yuan/mt, with open interest up 6,393 lots to 84,215 lots.

In the spot market, Jinchuan nickel was in premiums of 3,800-4,000 yuan/mt, an average of 3,900 yuan/mt and down 850 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 2,000-2,200 yuan/mt, with an average of 2,100 yuan/mt and down 200 yuan/mt on a daily basis. SHFE nickel surged in morning trade, while the spot prices stayed above 200,000 yuan/mt. Spot transactions were less than expected. Nickel briquette prices stood at 198,500-199,500 yuan/mt, up 1,750 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.]