SMM Morning Comment For SHFE Base Metals September 15

SHANGHAI, Sep 15 (SMM) –

Copper

LME copper prices opened at $8434/mt and closed with a gain of 0.52% at $8438/mt last evening, with the low-end of $8403/mt and the high-end of $8491/mt. Trading volume stood at 17,000 lots. Open interest stood at 278,000 lots. The most active SHFE 2310 copper contract prices opened at 69570 yuan/mt and finished at 69560 yuan/mt last evening, up 0.46%, with the low-end of 69370 yuan/mt and the high-end of 69620 yuan/mt. Trading volume was 24,000 lots, and open interest stood at 161,000 lots. On the macro front, retail sales in the US increased by 0.6% in August, higher than expected 0.2%. Its PPI monthly rate recorded 0.7%, the largest increase in more than a year, higher than the expected 0.4%. In addition, the number of initial jobless claims in the United States in the week to September 9 recorded 220,000, continuing to be lower than the expected 225,000. Downstream purchasing enthusiasm was weak. Yesterday, spot premiums turned into discounts in both East China or South China. In terms of consumption, the market has optimistic expectations for the peak season from September to October. It is expected that copper prices will remain rangebound at high levels due to market expectations over Fed ending interest rate hike.

Aluminum

Overnight, the most-traded SHFE 2310 aluminum contract opened at 19,360 yuan/mt, with its lowest and highest at 19,310 yuan/mt and 19,390 yuan/mt before closing at 19,330 yuan/mt, up 105 yuan/mt or 0.55% compared with the previous trading day. LME aluminum opened at $2,211/mt on Thursday, with its high and low at $2,239/mt and $2,206.5/mt respectively before closing at $2,220/mt, an increase of $12/mt or 0.54%.

There are expectations for hawkish stance of the US Fed. Domestic reserve requirement ratio cuts unleashed liquidity vitality and effectively boosted market confidence. In the near future, we need to pay close attention to the multiple impacts of interest rate hike expectations in Europe and the US and exchange rate fluctuations on the non-ferrous metals market. Aluminum supply increased, with domestic social inventory of aluminum ingots rising above the 500,000 mt mark, and the inventory pressure in September may mount. At the same time, the supply of imported goods in the market has increased recently, and we need to be alert to the impact of imported low-priced supplies on the domestic aluminum spot market. Low inventory will support aluminum price, while supply pressure will cap gains. It remains uncertain how strong demand will be in September since the demand in peak season didn’t reach expectations. SMM expects short-term aluminum prices to remain volatile at a high level and will pay attention to domestic aluminum inventories and downstream consumption in the future.

Lead

LME lead prices opened at $2245/mt and closed flat at $2245.5/mt in the overnight trading.

The most active SHFE 2310 lead contract prices opened at 16890 yuan/mt last evening, and closed at 16965 yuan/mt, an increase of 0.53%, with the high-end of 17020 yuan/mt and the low-end of 16845 yuan/mt.

Zinc

Last evening, LME zinc prices opened at $2526/mt and went up to close at $2560/mt, up $32/mt or 1.27%. Trading volume increased to 14219 lots, and open interest decreased 967 lots to 210,000 lots. Overnight LME inventories fell by 4,750 tons to 127,450 tons, a decrease of 3.59%. At the same time, boosted by domestic fiscal policy support and the end of the European Central Bank's interest rate hike expectations, LME zinc rose all the way.

The most active SHFE 2310 zinc contract prices opened at 22100 yuan/mt and closed at 21990 yuan/mt last evening, up 170 yuan/mt or 0.78%. The trading volume was down to 76990 lots, and open interest decreased 1926 lots to 108,000 lots. Overnight, the central bank sent another RRR cut message, which raised expectations for improving demand.

Tin

SHFE 2310 tin contract maintained sideways after the opening last night, then rose rapidly. It finally closed at 218,750 yuan/mt, up 0.86%.

Spot premiums and discounts barely changed yesterday. Small brand tin ingots were offered at premiums of 300 yuan/mt, premiums of 300-500 yuan/mt for delivery brands, and premiums of 1,000-1,200 yuan/mt for Yunxi brand. Imported tin brands were offered at a discount of 400 yuan/mt, and a discount of 500 yuan/mt for imported brand tin ingots slated to arrive in China next week. Buying sentiment in spot market cooled after tin price rallied sharply yesterday.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 161,190 yuan/mt, and closed at 162,300 yuan/mt, up 700 yuan/mt. Trading volume rose by 13,749 lots, and open interest decreased by 3,997 lots. The seasonally adjusted CPI annual rate announced by the U.S. Department of Labor at the end of August was 3.7%, higher than the previous market expectation of 3.6% and the previous value of 3.2%. The data reflects that inflation in August rebounded beyond market expectations but core CPI maintained a downward trend. Market expectations for an interest rate hike in September were still low, but expectations for future interest rate cuts were still uncertain. On the whole, negative macroeconomic factors weakened and nickel prices may rebound slightly in the future.