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SMM Morning Comment For SHFE Base Metals September 22
Sep 22, 2023 09:58Source:SMM
SHANGHAI, Sep 22 (SMM) –LME copper prices opened at $8176/mt and closed at $8225/mt in overnight trading, a drop of 1.35%, with the low-end of $8071/mt and the high-end of $8225.5/mt. Trading volume was 39,000 lots, and open interest stood at 256,000 lots.
SHANGHAI, Sep 22 (SMM) –
Copper
LME copper prices opened at $8176/mt and closed at $8225/mt in overnight trading, a drop of 1.35%, with the low-end of $8071/mt and the high-end of $8225.5/mt. Trading volume was 39,000 lots, and open interest stood at 256,000 lots. The most active SHFE 2310 copper contract prices opened at 67500 yuan/mt and finished at 68040 yuan/mt last evening, down 0.96%, with the low-end of 67500 yuan/mt and the high-end of 68050 yuan/mt. Trading volume was 45,000 lots, and open interest stood at 111,000 lots.
The US initial jobless claims recorded 201,000 in the week ending September 16, a new low since the week ending January 28. The Bank of England kept interest rates unchanged on Thursday, choosing not to raise interest rates for the first time in nearly two years as it battles stubbornly high inflation.
In terms of fundamentals, as of yesterday, imported copper in East China has been gradually digested. Downstream purchasing enthusiasm began to recover. In south China, inventory has fallen for two consecutive days. The decline in copper prices has boosted downstream stocking sentiment, and market trading has improved. In terms of consumption, with the National Day holiday approaching and copper prices falling, demand is expected to increase slightly in the near term. In terms of price, it is expected that copper prices will continue to be under pressure from accumulating inventories at home and abroad in the near future.
Aluminum
Overnight, the most-traded SHFE 2310 aluminum contract opened at 19,350 yuan/mt, with its lowest and highest at 19,280 yuan/mt and 19,385 yuan/mt before closing at 19,355 yuan/mt, down 55 yuan/mt or 0.28% compared with the previous trading day. LME aluminum opened at $2,248/mt on Thursday, then reached its high at $2248.5/mt and finally closed at $2,222/mt, a decrease of $32/mt or 1.42%
Market had digested hawkish stance of the US Fed. On fundamentals, the growth rate of domestic aluminum supply is decelerating, the import window is open, and the market's overseas aluminum ingot supply is on the rise. Due to fewer arrivals and pre-holiday stocking, aluminum ingot and billet stocks both fell in the middle of the week. However, demand is not particularly strong in the peak season, casting doubt over the sustainability of inventory drop. SHFE aluminum contract is anticipated to oscillate at a high level. Follow-up attention should be paid to domestic aluminum inventories and downstream stocking before the National Day holiday.
Lead
LME lead prices opened at $2,205/mt overnight with the low-end of $2,163/mt. LME lead finally closed at $2184.5/mt, down 1.09%.
The most active SHFE 2310 lead contract prices opened at 16855 yuan/mt last evening and finally closed at 16920 yuan/mt, down 1.05%. Open interest decreased 4487 lots to 68414 lots.
Zinc
Overnight, LME zinc prices opened at $2538/mt and closed down $12.5/mt or 0.49% at $2529.5/mt. The trading volume was 9480 lots, and open interest decreased 2159 lots to 219,000 lots. LME warrants decreased by 3,550 tons yesterday to 108,050 tons, providing a certain support for zinc prices.
Last evening, the most active SHFE 2311 zinc contract prices opened at 21240 yuan/mt and closed at 21580 yuan/mt, up 5 yuan/mt or 0.02%. Trading volume stood at 51,000 lots, and open interest gained by 5293 lots to 111,000 lots. Customs data shows that China imported less than 30,000 tons of zinc ingots in August, a sharp decline from the previous month. However, the SHFE/LME zinc price ratio ratio has been relatively high recently, stabilizing above 8.5. The import window remained open which, combined with the recent low-price shipments of imported zinc in the East China market will keep SHFE zinc prices from rising.
Tin
SHFE 2310 tin contract fell rapidly after opening on the Thursday night session, then rebounded to a low of 216,500 yuan/mt and maintained a sideways, finally closing at 217,450 yuan/mt, down 1.56%.
Spot premiums and discounts barely changed yesterday. Small brand tin ingots were offered at par with SHFE front-month tin contract, premiums of 300-600 yuan/mt for delivery brands, premiums of 1,000-1,200 yuan/mt for Yunxi brands, and discounts of 200-500 yuan/mt for imported tin brands. As the price of SHFE tin dropped sharply yesterday, some buyers entered the market. However, after the price rebounded, there was almost no buying interest from the downstream. Yesterday’s spot market transactions were still dull, with no significant change from the previous day’s transaction status.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 162,270 yuan/mt, and closed at 157,480 yuan/mt, down 6,060 yuan/mt. Trading volume rose by 19,874 lots, and open interest increased by 3,751 lots. On the macro front, in the early hours of Thursday morning, the Federal Reserve Board announced that the target range for the federal funds rate would remain at 5.25% to 5.5%, consistent with the previous value and market consensus, and the Federal Reserve once again paused raising interest rates. At the same time, Federal Reserve Chairman Powell's speech that day stated that the Federal Reserve may be prepared to further raise interest rates under appropriate circumstances, sending nickel price down. From a fundamental point of view, due to the gradual end of pre-holiday, the transaction activity in the spot market declined yesterday. In summary, it is expected that nickel prices may continue to fluctuate downward in the future.
LME copper prices opened at $8176/mt and closed at $8225/mt in overnight trading, a drop of 1.35%, with the low-end of $8071/mt and the high-end of $8225.5/mt. Trading volume was 39,000 lots, and open interest stood at 256,000 lots. The most active SHFE 2310 copper contract prices opened at 67500 yuan/mt and finished at 68040 yuan/mt last evening, down 0.96%, with the low-end of 67500 yuan/mt and the high-end of 68050 yuan/mt. Trading volume was 45,000 lots, and open interest stood at 111,000 lots.
The US initial jobless claims recorded 201,000 in the week ending September 16, a new low since the week ending January 28. The Bank of England kept interest rates unchanged on Thursday, choosing not to raise interest rates for the first time in nearly two years as it battles stubbornly high inflation.
In terms of fundamentals, as of yesterday, imported copper in East China has been gradually digested. Downstream purchasing enthusiasm began to recover. In south China, inventory has fallen for two consecutive days. The decline in copper prices has boosted downstream stocking sentiment, and market trading has improved. In terms of consumption, with the National Day holiday approaching and copper prices falling, demand is expected to increase slightly in the near term. In terms of price, it is expected that copper prices will continue to be under pressure from accumulating inventories at home and abroad in the near future.
Aluminum
Overnight, the most-traded SHFE 2310 aluminum contract opened at 19,350 yuan/mt, with its lowest and highest at 19,280 yuan/mt and 19,385 yuan/mt before closing at 19,355 yuan/mt, down 55 yuan/mt or 0.28% compared with the previous trading day. LME aluminum opened at $2,248/mt on Thursday, then reached its high at $2248.5/mt and finally closed at $2,222/mt, a decrease of $32/mt or 1.42%
Market had digested hawkish stance of the US Fed. On fundamentals, the growth rate of domestic aluminum supply is decelerating, the import window is open, and the market's overseas aluminum ingot supply is on the rise. Due to fewer arrivals and pre-holiday stocking, aluminum ingot and billet stocks both fell in the middle of the week. However, demand is not particularly strong in the peak season, casting doubt over the sustainability of inventory drop. SHFE aluminum contract is anticipated to oscillate at a high level. Follow-up attention should be paid to domestic aluminum inventories and downstream stocking before the National Day holiday.
Lead
LME lead prices opened at $2,205/mt overnight with the low-end of $2,163/mt. LME lead finally closed at $2184.5/mt, down 1.09%.
The most active SHFE 2310 lead contract prices opened at 16855 yuan/mt last evening and finally closed at 16920 yuan/mt, down 1.05%. Open interest decreased 4487 lots to 68414 lots.
Zinc
Overnight, LME zinc prices opened at $2538/mt and closed down $12.5/mt or 0.49% at $2529.5/mt. The trading volume was 9480 lots, and open interest decreased 2159 lots to 219,000 lots. LME warrants decreased by 3,550 tons yesterday to 108,050 tons, providing a certain support for zinc prices.
Last evening, the most active SHFE 2311 zinc contract prices opened at 21240 yuan/mt and closed at 21580 yuan/mt, up 5 yuan/mt or 0.02%. Trading volume stood at 51,000 lots, and open interest gained by 5293 lots to 111,000 lots. Customs data shows that China imported less than 30,000 tons of zinc ingots in August, a sharp decline from the previous month. However, the SHFE/LME zinc price ratio ratio has been relatively high recently, stabilizing above 8.5. The import window remained open which, combined with the recent low-price shipments of imported zinc in the East China market will keep SHFE zinc prices from rising.
Tin
SHFE 2310 tin contract fell rapidly after opening on the Thursday night session, then rebounded to a low of 216,500 yuan/mt and maintained a sideways, finally closing at 217,450 yuan/mt, down 1.56%.
Spot premiums and discounts barely changed yesterday. Small brand tin ingots were offered at par with SHFE front-month tin contract, premiums of 300-600 yuan/mt for delivery brands, premiums of 1,000-1,200 yuan/mt for Yunxi brands, and discounts of 200-500 yuan/mt for imported tin brands. As the price of SHFE tin dropped sharply yesterday, some buyers entered the market. However, after the price rebounded, there was almost no buying interest from the downstream. Yesterday’s spot market transactions were still dull, with no significant change from the previous day’s transaction status.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 162,270 yuan/mt, and closed at 157,480 yuan/mt, down 6,060 yuan/mt. Trading volume rose by 19,874 lots, and open interest increased by 3,751 lots. On the macro front, in the early hours of Thursday morning, the Federal Reserve Board announced that the target range for the federal funds rate would remain at 5.25% to 5.5%, consistent with the previous value and market consensus, and the Federal Reserve once again paused raising interest rates. At the same time, Federal Reserve Chairman Powell's speech that day stated that the Federal Reserve may be prepared to further raise interest rates under appropriate circumstances, sending nickel price down. From a fundamental point of view, due to the gradual end of pre-holiday, the transaction activity in the spot market declined yesterday. In summary, it is expected that nickel prices may continue to fluctuate downward in the future.
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For queries, please contact William Gu at williamgu@smm.cn
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