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SMM Morning Comment For SHFE Base Metals September 19

iconSep 19, 2023 10:01
LME copper prices opened at $8400/mt and closed with a drop of 0.68% at $8352/mt last evening, with the low-end of $8342/mt and the high-end of $8411.5/mt.



LME copper prices opened at $8400/mt and closed with a drop of 0.68% at $8352/mt last evening, with the low-end of $8342/mt and the high-end of $8411.5/mt. Trading volume stood at 14,000 lots. Open interest stood at 264,000 lots. The most active SHFE 2310 copper contract prices opened at 69300 yuan/mt and finished at 68950 yuan/mt last evening, down 0.46%, with the low-end of 68950 yuan/mt and the high-end of 69350 yuan/mt. Trading volume was 27,000 lots, and open interest stood at 151,000 lots. On the macro front, on September 18, local time, according to data released by the U.S. Department of the Treasury, the total U.S. national debt exceeded $33 trillion for the first time on September 18. In addition, the market expected that the Federal Reserve had reached the "last mile" of raising interest rates. However, soaring energy prices in August unexpectedly pushed inflation to rebound more than expected, and market expectations were shaken. On Fundamentals, As of Monday September 18, SMM copper inventories across major Chinese markets stood at 110,800 mt, up 9,900 mt from last Friday and 26,100 mt higher from the same period last year. The increase in inventories in East China is mainly due to the continued arrival of imported copper. In South China, the arrivals of more domestic copper and weak consumer demand under the current high copper prices increased local inventories. In terms of consumption, there is some room for demand to pick up after the delivery.


Overnight, the most-traded SHFE 2310 aluminum contract opened at 19,285 yuan/mt, with its lowest and highest at 19,195 yuan/mt and 19,320 yuan/mt before closing at 19,315 yuan/mt, up 120 yuan/mt or 0.63% compared with the previous trading day. LME aluminum opened at $2,192.5/mt on Monday, with its high and low at $2,222.5/mt and $2,185/mt respectively before closing at $2,217/mt, an increase of $21/mt or 0.96%. On the macro front, the Federal Reserve, the Bank of England and the Bank of Japan will announce interest rate decisions this week, and the market expects the Fed meeting on September 20 to remain on hold again. On a fundamental level, the growth rate of domestic aluminum supply is decelerating, import window is open, and the market's overseas aluminum ingot supply is on the rise. In addition, due to no obvious improvement in downstream operating rate during the peak season, both aluminum ingots and aluminum billet faced inventory accumulation this week. Short-term low inventory and low warehouse receipts will support aluminum prices, though. SHFE aluminum contract is anticipated to oscillate at a high level.


Overnight, LME lead prices opened at $2,261/mt and closed at $2247.5/mt, a decrease of 0.77%. During the Asian session, LME lead reaching as high as $2,270/mt. During the European session, LME lead stocks increased significantly, with the total amount exceeding the 60,000 mt mark. Prices fell to $2,226.5/mt.

The most active SHFE 2310 lead contract prices opened at 17150 yuan/mt overnight and finally closed at 17220 yuan/mt, up 0.35%, with the open interest down 867 lots to 86714 lots.


Overnight, LME zinc prices opened at $2514.5/mt and closed up $24/mt or 0.95% at $2539/mt. The trading volume was 8192 lots, and open interest increased 5924 lots to 223,000 lots. LME zinc inventories decreased by 3,975 tons from 122,000 tons to 118,600 tons. However, after overseas destocking, imported zinc continued to arrive, and the fundamental support for zinc prices was weak.

Last evening, the most active SHFE 2310 zinc contract prices opened at 21835 yuan/mt and closed at 21875 yuan/mt, up 95 yuan/mt or 0.44%. Trading volume stood at 37,000 lots, and open interest decreased by 2108 lots to 93,600 lots. In the spot market, spot goods were sufficient, and sellers sold aggressively, lowering spot premiums rapidly. Although the fundamental support for zinc prices has weakened, the downward channel for zinc prices may be narrow considering the recent downstream demand for replenishment before the holiday.


SHFE tin rose to 222470 yuan/mt overnight and closed up 0.6% at 221550 yuan/mt.

Spot premiums and discounts barely changed yesterday. Small brand tin ingots were offered at premiums of 200 yuan/mt, premiums of 300-600 yuan/mt for delivery brands, and premiums of 800-1,200 yuan/mt for Yunxi brand, and a discount of 500 yuan/mt for imported tin brands. Trades in spot market were muted.


Overnight, the most-traded SHFE nickel contract opened at 162,100 yuan/mt, and closed at 162,900 yuan/mt, up 100 yuan/mt. Trading volume rose by 32,836 lots, and open interest decreased by 1,942 lots. On the macro front, market participants should pay attention to the Fed’s interest rate decision on September 21, CST. The current market expectation is 5.50%, which is unchanged from the previous value. In terms of fundamentals, affected by the downward trend of SHFE nickel prices, pure nickel spot transactions picked up yesterday. In summary, it is expected that nickel prices may rebound slightly in the future.

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