SMM Morning Comment For SHFE Base Metals September 7

Published: Sep 7, 2023 09:57

Source: SMM

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LME copper prices opened at $8450.5/mt and closed at $8361.5/mt in overnight trading, a drop of 1.32%, with the low-end of $8351/mt and the high-end of $8450.5/mt.

SHANGHAI, Sep 7 (SMM) –

Copper

LME copper prices opened at $8450.5/mt and closed at $8361.5/mt in overnight trading, a drop of 1.32%, with the low-end of $8351/mt and the high-end of $8450.5/mt. Trading volume was 22,000 lots, and open interest stood at 282,000 lots. The most active SHFE 2310 copper contract prices opened at 69260 yuan/mt and closed at 69070 yuan/mt last evening, down 0.65%, with the high-end of 69360 yuan/mt and the low-end of 68950 yuan/mt. Trading volumes stood at 34,000 lots and open interest stood at 155,000 lots. On the macro front, a series of better-than-expected data released on Wednesday showed that US consumer demand and the overall economy remain strong, but inflation may remain high for a long time. Boston Fed President Collins said there may be grounds for further tightening of policy. In terms of fundamentals, due to the inflow of imported copper into east China, the pressure on the domestic trade market increased. Yesterday, inventories snapped a growth for four consecutive days, but downstream purchasing was quiet, weakening the overall transaction. In terms of consumption, most of the market players stood on the sidelines. Copper prices are likely to fall further as the Fed reiterated the likelihood of raising interest rate.

Aluminum

Overnight, the most-traded SHFE 2310 aluminium contract opened at 19,180 yuan/mt, with the lowest and highest prices at 19,090 yuan/mt and 19,185 yuan/mt before closing at 19,110 yuan/mt, down 10 yuan/mt or 0.05% from the previous trading day. LME aluminium opened at $2,193/mt on Wednesday with its high and low at $2,219.5/mt and $2,186/mt respectively before closing at $2,193/mt.

On the macro side, domestic favorable policies wield boosting effects on markets significantly. But the vacillating attitude of Europe and the Fed to raise interest rates added to macro uncertainty. In the fundamentals, recent concentrated arrivals of aluminum ingots increased social inventory accumulation, weakening the support for aluminum prices. The short-term aluminum price is expected to face downside risk, but it is necessary to closely observe the consumption changes in the peak season.

Lead

LME lead prices opened at $2225/mt and closed at $2228.5/mt last evening, up $3.5/mt or 0.16%, with the low-end of $2201.5/mt. The most active SHFE lead contract prices opened at 16745 yuan/mt and rose 150 yuan/mt or 0.9% to close at 16865 yuan/mt last evening, with the high-end of 16945 yuan/mt. Open interest increased 903 lots to 94,000 lots.

Zinc

LME zinc prices opened at $2468/mt last evening and closed up $11.5/mt or 0.47% at $2476/mt, with the low-end of $2442.5/mt. Trading volume rose to 7637 lots, and open interest increased by 1251 lots to 200,000 lots. LME zinc inventory decreased by 3175 mt to 148400 mt.

The most active SHFE 2310 zinc contract prices opened at 21335 yuan/mt and closed at 21305 yuan/mt last evening, down 15 yuan/mt or 0.07%. The trading volume was down to 54556 lots, and open interest decreased 402 lots to 106,000 lots. Data related to the US service industry in August exceeded expectations and unexpectedly gained momentum. New orders increased and input prices rose. This showed that US consumer demand and the overall economy are still strong, but it also means that inflation problems are once again prominent. The US dollar rose. SMM data showed that China's refined zinc output in August was 526,500 mt, a month-on-month decrease of 24,600 mt or 4.46%. The decline in production provided support for the domestic zinc market.

Tin

Overnight, SHFE 2310 tin contract price fell quickly to 221,650 yuan/mt after opening, but then rose quickly to 224,110 yuan/mt. The price finally closed at 220,920 yuan/mt, up 0.14%.

Spot premiums and discounts changed slightly on September 6 morning. Small brand tin ingots were offered at discounts of 100 yuan/mt to premiums of 200 yuan/mt, and premiums of 100-500 yuan/mt for delivery brands, premiums of 700-1,100 yuan/mt for Yunxi brand, and discounts of 400-200 yuan/mt for imported brands. Downstream purchases were sluggish yesterday.

Nickel

The most traded SHFE nickel contract opened at 172,000 yuan/mt and closed at 171,860 yuan/mt at the night session on September 6, an increase of 60 yuan/mt from the previous trading day. The trading volume decreased by 9,586 lots and the open interest increased by 543 lots. It means that both longs and shorts held a strong wait-and-see approach. Although investors were relatively optimistic about subsequent market performance, their lack of willingness to trade will still result in limited subsequent price rise. Due to positive market sentiment promoted by US macro data and the tight supply of raw materials, nickel prices fluctuated upwards yesterday. In terms of fundamentals, trades in spot market remained thin and downstream demand was sluggish. In summary, nickel prices may be volatile in the future.

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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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