SMM Morning Comment For SHFE Base Metals September 25

SHANGHAI, Sep 25 (SMM) –
Copper
Copper prices moved rangebound
LME copper prices opened at $8269.5/mt and closed at $8198.5/mt last Friday evening, a drop of 0.32%, with the high-end of $8281/mt and the low-end of $8196.5/mt. Trading volume was 16,000 lots and open interest stood at 263,000 lots. The most active SHFE 2311 copper contract prices opened at 68140 yuan/mt and closed at 67850 yuan/mt last evening, down 0.1%, with the high-end of 68170 yuan/mt and the low-end of 67770 yuan/mt. Trading volumes stood at 23,000 lots and open interest stood at 138,000 lots. On the macro front, the initial value of the Markit manufacturing PMI in the United States in September was recorded at 48.9, a new high in 2 months, but it has been in contraction range for five consecutive months; the initial value of the service industry PMI was recorded at 50.2, which was lower than the expected 50.6, which was the lowest in 8 months. The preliminary comprehensive PMI value was 50.1, a new low in seven months. Fed Governor Bowman said that inflation is still too high and further interest rate increases may be appropriate. SMM data showed that as of Friday August 22, copper inventory across major Chinese markets stood at 94,700 mt, down 16,100 mt from last Monday and down 6,200 mt from two Fridays ago. Although there is an inflow of imported copper in East China, the total volume has decreased compared with last week. And with the sharp drop in copper prices, downstream replenishment enthusiasm has increased, resulting in a decrease in inventory; inventories in South China have declined slightly, mainly due to reduced shipments from smelters after delivery, and downstream began pre-holiday stocking. In terms of consumption, this week will enter the peak pre-holiday stocking period, and demand is expected to continue to increase. Copper prices are expected to recover slightly.
Aluminum
Last Friday’s night session, the most-traded SHFE 2311 aluminium contract opened at 19,505 yuan/mt, with its lowest and highest at 19,420 yuan/mt and 19,510 yuan/mt before closing at 19,445 yuan/mt, down 60 yuan/mt or 0.31%. LME aluminium opened at $2,222/mt last Friday and hit a high of $2,250.5/mt before closing at $2,250.5/mt, an increase of $28.5/mt or 1.29%.
From a macro perspective, the Federal Reserve announced its September interest rate decision as scheduled and suspended interest rate increases. However, the economic situation in Europe and the United States is poor, and the hawkish Fed's stance suggests that there is still possibility of raising interest rates and maintaining high interest rates. Domestic macro sentiment is stable. The current growth rate of domestic aluminium supply is slowing down, the import window is opening, driving overseas aluminium ingots to flow into China. However, domestic downstream consumption is resilient, and low inventory will also support aluminium prices. SMM expects short-term aluminium price fluctuate at a high level, and will pay attention to domestic aluminium inventories and downstream consumption in the future.
Lead
SMM Lead Morning Comments
SHANGHAI, Sep 25 (SMM) -
LME lead prices opened at $2181.5/mt last Friday evening and closed at $2204/mt, a rise of 0.89%, with the high-end of $2217.5/mt.
The most active SHFE 2311 lead contract prices opened at 16840 yuan/mt and fell 110 yuan/mt or 0.65% to close at 16870 yuan/mt.
Zinc
SMM Zinc Morning Comments
Last Friday evening, LME zinc prices opened at $2529/mt and closed at $2556/mt, up $26.5/mt or 1.05%. The trading volume reached 9108 lots, and the open interest reached 223,000 lots. LME zinc inventories decreased 2650 mt to 105400 mt, a decline of 2.45%. Continuous decreases in overseas inventories have given bottom support to LME zinc, and the initial value of the Eurozone PMI in September was higher than expected at 47.1.
The most active SHFE 2311 zinc contract prices opened at 21900 yuan/mt and settled at 21785 yuan/mt last Friday evening, up 160 yuan/mt or 0.74%. Trading volumes stood at 72478 lots, and open interest stood at 130,000 lots.
Tin
SHFE 2310 Tin contract rose rapidly after opening on the Friday night session to a high of 225,640 yuan/mt and fell back slightly, finally closing at 223,550 yuan/mt, up 2.81%.
Spot premiums and discounts barely changed Last Friday. Small brand tin ingots were offered at premiums of 0-400 yuan/mt, premiums of 400-600 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. Spot market activity picked up last Friday as pullback of tin prices from highs and upcoming National Day holiday drove downstream to stock up.
Nickel
On last Thursday, the Federal Reserve opted to maintain its benchmark interest rate at its current target range of between 5.25% and 5.5%, which was in line with previous levels and market expectations. It means that the Federal Reserve put a pause on interest rate hikes. On the same day, Federal Reserve Chair Powell's comments hinted that the Fed might raise interest rates further if needed. This led markets to expect the Fed to hike rates in the second half of the year, which put downward pressure on nickel prices. In terms of fundamentals, spot market saw decent overall transactions last week. However, compared to the week ending September 15, transactions slightly declined in the week ending September 22. The main reason for this is that some downstream buyers had already completed their pre-holiday stockpiling during the previous nickel price drop. Additionally, some alloy mills restocked their essential inventory for November during this procurement. In terms of stainless steel, some steel mills are currently facing reduced demand. It is expected that they will gradually reduce production and shut down by the end of September and in October. This will lead to a decrease in the production of 300-series stainless steel, ultimately impacting the demand for pure nickel. In terms of electroplating, the electroplating industry is influenced by the "Golden September, Silver October", with orders remaining stable compared to expectations. There is a consistent demand for high-end nickel plates, with a slight increase. Additionally, it is anticipated that due to the signing of September orders at the end of this month, there may be a periodic shortage of nickel salt supply, leading to a potential continued rise in nickel salt prices. In summary, it is expected that nickel prices will experience some fluctuations this week due to the influence of macro sentiments and weakening demand. However, the cost support from nickel sulphate will limit the downside potential of nickel prices.