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SMM Review of Pre-Holiday Base Metals Market and Prospect
Sep 30, 2022 20:00CST
Source:SMM
According to SMM survey on the domestic major aluminium processing enterprises, their operating rates will vary during the National Day holiday, depending on their orders. Most of the small and medium-sized enterprises will close for 3-7 days for the holiday, while larger ones will take a shorter or even no break.

SMM Survey on the National Day Holiday Arrangements of Copper Processing Companies in 2022

Enamelled wire: The enamelled wire industry remained sluggish in 2022. The operating rates of enamelled wire producers were low, but their in-plant inventories of finished products stood high. At present, many downstream companies are bearish on copper prices. Due to the poor demand, the downstream pre-holiday restocking cannot reach expectations. Many enterprises such as motor factories and home appliance factories are going to have a holiday. Therefore, the holiday time of enamelled wire companies in 2022 will be longer than in previous years, and more companies plan to have a holiday.

SMM Survey on the National Day Holiday Arrangements of Copper Processing Companies in 2022_SMM | Shanghai Non ferrous Metals

Downstream Stocking in Aluminium Market Was Modest before the National Day Holiday, Post-Holiday Aluminium Ingot to Accumulate Significantly due to Longer Break by Small and Medium-Sized Downstream Enterprises

According to SMM survey on the domestic major aluminium processing enterprises, their operating rates will vary during the National Day holiday, depending on their orders. Most of the small and medium-sized enterprises will close for 3-7 days for the holiday, while larger ones will take a shorter or even no break.   In terms of sectors, enterprises in the aluminium plate/sheet, strip, foil and primary aluminium alloy sectors will maintain stable operations during the holiday, while those in the aluminium extrusion and secondary aluminium alloy sectors will generally take a break. Lower aluminium prices drove downstream enterprises to stock up ahead of the holiday, but most restocked only as needed. The aluminium ingot social inventories across China’s eight major markets totalled 619,000 mt as of September 29, a drop of 47,000 mt from a week ago and 33,000 mt from this Monday September 26. The figure was also 198,000 mt lower than a year ago and 57,000 mt less than that at the end of August. The domestic aluminium billet inventory dropped 26,000 mt from a week ago to 80,100 mt as of September 29.

Downstream Stocking in Aluminium Market Was Modest before the National Day Holiday, Post-Holiday Aluminium Ingot to Accumulate Significantly due to Longer Break by Small and Medium-Sized Downstream Enterprises _SMM | Shanghai Non ferrous Metals

Holiday Arrangements of Downstream Enterprises of Zinc Industrial Chain for National Day Holiday

Galvanising plants: SMM surveyed 39 galvanising plants with a total production capacity of 25.09 million mt. It is learned that 20 plants will have a holiday ranging from 2 to 5 days. Most enterprises planned to take a three-day break, which will affect 6,419 mt of zinc consumption, 434 mt down from 6,853 mt in the same period of 2021. Last year, many large galvanising plants decided to close not only for the National Day holiday but also due to power rationing. This year, despite that the monthly operating rate of galvanising plants had previously dropped about 15 percentage points year-on-year, the recent increase in steel prices as well as the increased stockpiling of terminal enterprises led to an improvement in sales. Therefore, the operating rates of galvanising plants rose, and the inventories fell. Some enterprises have temporarily changed their holiday arrangements.

Holiday Arrangements of Downstream Enterprises of Zinc Industrial Chain for National Day Holiday_SMM | Shanghai Non ferrous Metals

SMM Research on the National Day Holiday Arrangements of Lead-Acid Battery Producers in 2022

In August and September, the lead-acid battery market entered the traditional peak season of consumption. The supporting orders brought about by the increase in the production and sales of new cars increased, and the companies' orders generally grew amid the improving seasonal replacement demand. At the same time, due to the impact of hot weather-related power cuts in August, lead-acid battery producers in Anhui, Zhejiang, Jiangsu and other regions cut their production to varying degrees, which quickly reduced the in-plant inventory of finished products. And some producers, mainly the medium and large ones, even experienced shortages of finished products. Most large and medium-sized enterprises plan to take no or less holiday during the National Day (usually 1-3 days) as orders boom and goods are in short supply approaching the holiday, among which the small ones will take 3-5 days off.

SMM Research on the National Day Holiday Arrangements of Lead-Acid Battery Producers in 2022_SMM | Shanghai Non ferrous Metals

Review of Nickel Market Restocking Progress ahead of National Day Holiday

At present, the market is more concerned about the restocking progress of pure nickel under the background of the traditional peak season in September and October, as well as the approaching National Day holiday. The downstream fields of pure nickel mainly include special steel, stainless steel, nickel salt and others. According to the SMM research, although the special steel sector has a higher tolerance for nickel price, it was still restricted by the high nickel price to some extent. Meanwhile, the industry generally does not have the habit of building stocks before the festival or even in usual time, while some plan to reduce the production during the holiday. Secondly, the stainless steel manufacturers usually stockpile NPI and ferronickel during this period.

Review of Nickel Market Restocking Progress ahead of National Day Holiday [SMM Review]_SMM | Shanghai Non ferrous Metals

Pre-Holiday Stocking in Stainless Steel Market Fell Short of Expectations, Prices Likely to Stabilise after the National Day Holiday

According to SMM survey, while the National Day holiday is just a few days away, the pre-holiday stocking activities in the two major stainless steel spot markets have fallen short of expectations. In mid-September, traders carried out centralised purchases. Therefore, trading activities waned in the last trading week before the week-long holiday. The supply of stainless steel of conventional specifications has returned to normal, but cargoes of certain specifications are still in shortfalls due to raw material problems. Sell-offs of HRC at lower prices were reported due to strong expectations that its supply will increase after the holiday. The demand from downstream pipe factories and stamping parts factories picked up.

Pre-Holiday Stocking in Stainless Steel Market Fell Short of Expectations, Prices Likely to Stabilise after the National Day Holiday_SMM | Shanghai Non ferrous Metals

EMM Prices Rose amid the Steel Bids and the Centralised Supply Before the Holiday, and Can the Prices Still Remain Firm after the Holiday?

First of all, the EMM supply remained tight as some plants resumed their production slowly and a large one plans to cut its production in October. Secondly, due to the relatively concentrated spot inventory and the repeated pandemic outbreaks in China, the market was worried about the liquidity of the future supply of goods, thus the EMM plants became more bullish on the prices. Finally, before the holiday, the bid prices of steel mills were released one after another, and the prices added 300 yuan/mt on average, boosting the market.

EMM Prices Rose amid the Steel Bids and the Centralised Supply Before the Holiday, and Can the Prices Still Remain Firm after the Holiday?_SMM | Shanghai Non ferrous Metals

SMM Outlook for the Ferrochrome Market after the National Day Holiday

Approaching the National Day holiday, many mainstream steel mills set the bid price of high-carbon ferrochrome for October, which was lower than the market's previous expectations. However, the domestic retail prices of ferrochrome remained high as the ferrochrome plants suffered losses from the stable prices of spot chrome ore, thus the price difference between the retail prices and bid prices expanded. The traditional peak season of September and October has passed halfway, and the game in the ferrochrome market has intensified.

SMM Outlook for the Ferrchrome Market after the National Day Holiday_SMM | Shanghai Non ferrous Metals

Pre-Holiday Purchasing of Lithium Carbonate Active, Chemicals Transportation Restricted during National Day Holiday

A number of provinces and regions including Jiangsu, Shandong, Beijing-Tianjin-Hebei region, Sichuan have all released the notices that vehicles carrying hazardous chemicals and alike are with restricted access to highways during the National Day holiday. For example, the Public Security Traffic Management Department of the Beijing Municipal Public Security Bureau announced on its website that in order to ensure the safety of highway traffic during the National Day in 2022, and in accordance with the Road Traffic Safety Law of the People's Republic of China and the Regulations on the Safety Management of Hazardous Chemicals, the Public Security Traffic Management Department, Tianjin Public Security Traffic Administration, and Hebei Public Security Department Traffic Administration have decided to impose restrictions on vehicles from transporting dangerous goods from 0:00 on October 1 to 24:00 on October 7, 2022

Pre-Holiday Purchasing of Lithium Carbonate Active, Chemicals Transportation Restricted during National Day Holiday_SMM | Shanghai Non ferrous Metals

Rare Earth Prices Rose before the National Day Holiday, but Whether the Gains Will Sustain after the Holiday Faces Uncertainty

In the last trading week before the National Day holiday, the rare earth spot market performed well. Magnetic material companies gradually completed pre-holiday stocking, thus rare earth prices stabilised following initial gains. Large magnetic material companies said their new orders rose slightly this week, while some small magnetic material companies reported that their orders did not improve significantly. At present, many rare earth metal factories have expressed that the spot supply of rare earth oxides is relatively tight. Some rare earth metal factories even suspended their quotations.

Rare Earth Prices Rose before the National Day Holiday, but Whether the Gains Will Sustain after the Holiday Faces Uncertainty _SMM | Shanghai Non ferrous Metals

SMM Survey on Downstream Stocking Situation in Manganese-Related Industries before the National Day Holiday

Steel mills also issued bids for EMM. As EMM prices are relatively high, the demand was limited and mainly contributed by special steel and alloy plants. Trading activities picked up, but market prices were chaotic as sellers rushed to clear their inventories due to concerns over post-holiday logistics, given the unstable pandemic situation. 

SMM Survey on Downstream Stocking Situation in Manganese-Related Industries before the National Day Holiday _SMM | Shanghai Non ferrous Metals

Magnesium Prices Fall Gradually and Stabilise with Pre-Holiday Restocking Completing

At present, the market players in the magnesium market have basically completed their restocking plans for the National Day holiday. Affected by multiple bearish factors, the “Golden Nine” seasonal high in September fell short of expectations, accompanied by lacklustre downstream orders. Magnesium prices thus lacked upside momentum and returned to the level recorded at the beginning of September.

Magnesium Prices Fall Gradually and Stabilise with Pre-Holiday Restocking Completing_SMM | Shanghai Non ferrous Metals

How Is Silver Downstream Restocking Going amid Violently Fluctuating Silver Prices This Week?

In the last trading week before the National Day holiday, many Federal Reserve officials sent hawkish signals. Meanwhile, the longs and shorts have been intertwined amid disclosed economic readings and recession fears, and the prices of silver fluctuated violently. Since Ag (T+D) contract will not be trading during the holiday, what will be the factors influencing the prices of silver and other products? How are the downstream sectors performing at present?

How Is Silver Downstream Restocking Going amid Violently Fluctuating Silver Prices This Week?_SMM | Shanghai Non ferrous Metals

SMM Analysis: Tungsten Prices Kept Falling amid Poor Pre-Holiday Stocking, Post-Holiday Outlook Remains Bleak

At present, the production of mines is still proceeding smoothly. As stricter environmental protection checks in October will hamper production, small and medium-sized private mining enterprises are now running at full capacity.

On the smelting side, due to the recent weak downstream demand, APT prices have continued to fall. Most smelters maintained their operating rates at 70-80% for delivery under long-term contracts and rarely sold cargoes into the spot market. Smelters restocked only as needed.

SMM Analysis: Tungsten Prices Kept Falling amid Poor Pre-Holiday Stocking, Post-Holiday Outlook Remains Bleak_SMM | Shanghai Non ferrous Metals

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