SMM Morning Comment For SHFE Base Metals September 8

SHANGHAI, Sep 8 (SMM) –

Copper

LME copper prices opened at $8280/mt and closed at $8305/mt in overnight trading, a decline of 0.68%, with the low-end of $8265/mt and the high-end of $8330/mt. Trading volume was 23,000 lots, and open interest stood at 284,000 lots. The most active SHFE 2310 copper contract prices opened at 68890 yuan/mt and closed at 68910 yuan/mt last evening, down 0.33%, with the high-end of 68980 yuan/mt and the low-end of 68740 yuan/mt. Trading volumes stood at 32,000 lots and open interest stood at 152,000 lots. On the macro front, after the ISM non-manufacturing index showed that the service industry was still strong on Wednesday, the number of initial jobless claims announced on Thursday hit a half-year low, which also showed that the labor market is still resilient. This once again strengthened the market’s expectations of the Fed’s tightening measures. Two senior Federal Reserve officials hinted on Thursday (September 7) that the Fed will keep interest rates unchanged at its September meeting. But they refused to declare victory in the fight against inflation. In terms of fundamentals, east China was still affected by the continuous inflow of imported copper, and the spot quotes continued to decline yesterday. Although the copper prices moved down, the enthusiasm for downstream procurement was still weak. The inventory in south China has declined for 2 consecutive days, mainly due to the lack of arrivals. The overall transaction yesterday improved compared with Wednesday. In terms of consumption, demand growth is expected to be limited. In terms of prices, copper prices are expected to be under pressure in the near future as the U.S. labor market remains resilient.

Aluminum

Overnight, the most-traded SHFE 2310 aluminium contract opened at 19,175 yuan/mt, with the lowest and highest prices at 19,110 yuan/mt and 19,175 yuan/mt before closing at 19,165 yuan/mt, down 10 yuan/mt or 0.05% from the previous trading day. LME aluminium opened at $2,193/mt on Thursday with its high and low at $2,199/mt and $2,176.5/mt respectively before closing at $2,196.5/mt.

On the macro side, domestic favorable policies wield boosting effects on markets significantly. But the pace of interest rate hikes by the Fed and the ECB became the biggest variable in the short-term macro. In the fundamentals, the supply of aluminum increased but social inventory is still at a historically low level in the same period. Whether the demand side will usher in a significant improvement during the traditional peak season was still uncertain. The short-term aluminum price is expected to fluctuate, and it is necessary to closely observe the impacts of domestic and overseas macroeconomic changes on aluminum prices

Lead

LME lead prices opened at $2225.5/mt and closed at $2226.5/mt last evening, down $2/mt or 0.09%, with the low-end of $2212.5/mt and the high-end of $2244/mt.

The most active SHFE lead contract prices opened at 17075 yuan/mt and gained 140 yuan/mt or 0.83% to close at 17070 yuan/mt last evening, with the high-end of 17100 yuan/mt and the low-end of 16880 yuan/mt. Open interest decreased 1391 lots to 94,000 lots.

Zinc

LME zinc prices opened at $2466/mt and closed up $13.5/mt or 0.55% at $2489/mt last evening. The trading volume decreased to 6938 lots, and open interest added 899 lots to 201,000 lots. LME zinc inventory decreased by 3225 mt to 145175 mt. The number of initial jobless cliams in the US for the week ending September 2 stood at 216,000, hitting a six-month low. That showed that the labor market is still resilient, and expectations of interest rate hikes continued to rise. The U.S. dollar index remained at a high level, but stopped rising at the end of the day. This, combined with falling LME zinc inventories, helped LME zinc rebound. The most active SHFE 2310 zinc contract prices opened at 21355 yuan/mt and closed at 21530 yuan/mt last evening, up 175 yuan/mt or 0.82%. The trading volume was down to 91537 lots, and open interest decreased 6955 lots to 115,000 lots. Favorable policies for real estate and automobiles, coupled with the current declining zinc concentrate TCs, provided support for SHFE zinc prices.

Tin

Overnight, SHFE 2310 tin contract price moved at highs. The price finally closed at 221,230 yuan/mt, up 0.33%.

Spot premiums and discounts barely changed on September 7 morning. Small brand tin ingots were offered at premiums of 0-300 yuan/mt, and premiums of 100-500 yuan/mt for delivery brands, premiums of 800-1,100 yuan/mt for Yunxi brand, and discounts of 400-200 yuan/mt for imported brands. Downstream purchases were still sluggish yesterday.

Nickel

The most traded SHFE nickel contract opened at 170,210 yuan/mt and closed at 167,620 yuan/mt at the night session on September 7, a decrease of 4,240 yuan/mt from the previous trading day. The trading volume increased by 44,577 lots and the open interest decreased by 2,786 lots. On the macro front, the high inflation data brought about by the higher-than-expected US services PMI persuaded the market to believe that the Fed will raise interest rates, sending down commodities prices yesterday. Trades in spot market remained thin and downstream demand was sluggish. In summary, nickel prices may be volatile in the future.