SMM Evening Comments (Sep 29): Shanghai Nonferrous Metals Closed All with Gains amid Easing Market Sentiment

SHANGHAI, Sep 29 (SMM) – Shanghai nonferrous metals closed all with gains as US dollar retreated from high. And the downstream restocking ahead of the National Day holiday also created some momentum.

Shanghai copper jumped 1.11%, aluminium gained 0.08%, lead advanced 0.98%, zinc added 0.74%, tin rose 0.26%, and nickel climbed 0.46%.

Copper: The most-traded SHFE 2211 copper closed up 1.11% or 670 yuan/mt at 60,870 yuan/mt, with open interest up 728 lots to 148,758 lots.

On the macro front, the surging US dollar has caused global anxiety. Following Japan's move, the Bank of England announced yesterday an "unlimited" temporary purchase of long-term government bonds with a maturity of over 20 years to stabilise the market. In addition, the U.S. durable goods orders in August fell for the second consecutive month, the largest decline since this February. The manufacturing data in recent weeks suggest that the U.S. economy is losing momentum, pressuring US dollar.

In the spot market, downstream restocking was still robust despite high premiums and wide SHFE 2210 and 2211 contract spread, alluding spot supply tightness. The sellers were still active though the National Day holiday is approaching. SMM believes that spot premiums will gradually stabilise ahead of the holiday, and the import of copper cathode post the holiday shall be watched.

Aluminium: The most-traded SHFE 2211 aluminium closed up 0.08% or 15 yuan/mt to 17,990 yuan/mt, with open interest down 2,715 lots to 179,159 lots.

On the supply side, it is rumoured that the production reduction by aluminium smelters in Yunnan will expand again. The accident at the Nord Stream pipeline will make it difficult for short-term European energy prices to drop, fuelling a new round of bullish sentiment. On the demand side, the production and sales of downstream enterprises continued to recover, but at a much slower pace than in the same period of previous years. In the short term, the market will pay attention to whether the aluminium production reduction at home and abroad will expand again, and aluminium prices are expected to fluctuate strongly.

Lead: The most-traded SHFE 2211 lead closed up 0.98% or 145 yuan/mt at 15,005 yuan/mt, with open interest down 5,090 lots to 48,620 lots.

Spot goods circulating in the market were insufficient, and active downstream consumption as well as pre-National Day holiday restocking offered some momentum to lead price. The pandemic situation in Anhui is worth attention concerning its impact on secondary refined lead after the holiday.

Zinc: The most-traded SHFE 2211 zinc closed up 0.74% or 175 yuan/mt at 23,785 yuan/mt, with open interest down 6,180 lots to 107,271 lots.

Market sentiment eased after US dollar index dropped slightly with weakening momentum. Zinc price was less pressured. Considering the low social inventory as well as improving market sentiment ahead of the National Day holiday, zinc price will gain support in the near term.

Tin: The most-traded SHFE 2211 tin closed up 0.26% or 460 yuan/mt at 179,610 yuan/mt, with open interest down 3,035 lots to 41,915 lots.

In the spot market, the quotes offered by smelters in early trade diverged, and some lowered their offers in order to promote the sales, while some stayed firm to their prices. According to the feedback of traders, the quotes of some non-deliverable brands were flat. The transactions in the spot market were limited.

Nickel: The most-traded SHFE 2211 nickel closed up 0.46% or 830 yuan/mt at 180,220 yuan/mt, with open interest up 5,871 lots to 69,224 lots.

On the supply side, spot pure nickel premiums stabilised after SHFE nickel fell, and the upstream selling sentiment improved. For NPI, the prices rose throughout September, and the shipments also picked up amid rising demand. NPI inventory was low at present. On the demand side, the arrivals of stainless steel in the market were smooth, but the demand growth slightly fell short, aggravating inventory pressure. Spot prices of stainless steel are expected to remain stable in the near term as traders are eager to gain cash ahead of the National Day holiday. For alloy, as spot pure nickel prices dropped from high, the demand boomed. To sum up, nickel prices are likely to remain rangebound with improving supply-demand balance of pure nickel.

[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.]