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SMM Morning Comment For SHFE Base Metals September 27
Sep 27, 2023 09:55Source:SMM
Copper prices down on rebounding US dollar index
SHANGHAI, Sep 27 (SMM) –
Copper
Copper prices down on rebounding US dollar index
LME copper prices opened at $8127/mt and closed at $8106.5/mt last evening, down 0.52%. Trading volume was 21,000 lots and open interest stood at 267,000 lots. The most active SHFE 2311 copper contract prices opened at 67190 yuan/mt and closed at 67280 yuan/mt last evening, a drop of 0.34%, with the high-end of 67440 yuan/mt and the low-end of 67050 yuan/mt. Trading volume was 31,000 lots, and open interest stood at 151,000 lots. On the macro front, Minneapolis Fed President Neel Kashkari expects to raise interest rates again this year and then leave them unchanged. In addition, he believes there is a 40% chance that the Fed will have to significantly raise interest rates to curb inflation. The US dollar index posted a six-day winning streak, putting pressure on copper prices. In terms of fundamentals, transaction activity in East China has begun to decline yesterday. Although copper prices continued to shift downward, due to the relatively abundant supply of goods, purchasers had strong dominance. And the market preferred front-month invoices; inventories in South China stopped falling and rebounded, but the increase was small. The supply of goods available for circulation in the market was still insufficient. In terms of consumption, as of yesterday, market replenishment was basically completed, and demand growth is expected to decline in the remaining two days before the holidays. It is expected that copper prices will still have room to decline in the near future.
Aluminum
Overnight, the most-traded SHFE 2311 aluminum contract opened at 19,405 yuan/mt, with its lowest and highest at 19,350 yuan/mt and 19,440 yuan/mt before closing at 19,400 yuan/mt, up 65 yuan/mt or 0.34% compared with the previous trading day. LME aluminum opened at $2,249.5/mt on Tuesday, with its high and low at $2,249.5/mt and $2,222/mt respectively before closing at $2,241/mt, an increase of $7/mt or 0.31%.
On the macro front, the Federal Reserve announced the suspension of interest rate increases in September. However, considering the poor economic situation in Europe and the United States, the Fed's members may still push interest rate hikes. Domestic macroeconomic sentiment remained stable. On a fundamental level, 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. But aluminum stocks remain low amid resilient domestic downstream consumption. Short-term low inventory and low warehouse receipts will support aluminum prices, though. SHFE aluminum contract is anticipated to oscillate at a high level. Follow-up attention should be paid to domestic aluminum inventory and downstream consumption.
Lead
SMM lead morning comments
SHANGHAI, Sep 27 (SMM) -
LME lead prices opened at $2181/mt and gained $1/mt or 0.05% to settle at $2183/mt in last evening, with the high-end of $2203/mt.
The most active SHFE 2311 lead contract prices opened at 16820 yuan/mt and touched 16825 yuan/mt before closing at 16755 yuan/mt, down 30 yuan/ 0.18%.
Zinc
Federal Reserve's hawkish speech weighed down LME zinc prices
Overnight, LME zinc opened at $2,530/ton and reached a high of $2,570/ton. The contract finally closed down at $2,512.5/ton, down $19.5/ton, or 0.77%, with trading volume of 9293 lots and open interest were 226,000 lots. LME zinc stocks increased by 5975 tons to 107525 tons. The increase was 5.88%. Federal Reserve officials stated that the possibility of a soft landing in the United States is 60%, and there is a 40% possibility that interest rates will need to be significantly raised. The speech was hawkish and drove the dollar index to rise. Nonferrous metals were under pressure.
Last evening, the most active SHFE 2311 zinc contract prices opened at 21830 yuan/mt before closing at 21575 yuan/mt, down 265 yuan/mt or 1.21%. Trading volume was 83,900 lots, and open interest were 126,000 lots. Spot trading was quiet.
Tin
SHFE 2310 tin contract rose slightly after opening on yesterday’s night session and fell back to a relatively low of 221,070 yuan/mt, then maintained a sideways fluctuation and finally closed at 221,030 yuan/mt, up 0.12%.
Spot premiums and discounts barely changed yesterday. Small brand tin ingots were offered at a discount of 200 yuan/mt to a premium of 200 yuan/mt, premiums of 300-600 yuan/mt for delivery brands, premiums of 800-1,100 yuan/mt for Yunxi brands, and discounts of 500-600 yuan/mt for imported tin brands. Although tin prices fell slightly yesterday, the overall purchasing intention of downstream companies was even more sluggish than the day before due to their inventory replenishment in advance. Most reported that there were no transactions or few transactions, and only imported tin and small brands with large discounts were acceptable for shipment.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 156,690 yuan/mt, and closed at 155,200 yuan/mt, up 950 yuan/mt. Trading volume dropped by 31,025 lots, and open interest increased by 6,146 lots. On the macro front, market attention should be paid to the data of the US unemployment benefits application number, which reflects the current activity of the US job market and thereby affects market expectations for subsequent interest rate hikes by the Fed. In the fundamentals, yesterday’s spot market transactions were muted as some enterprises have begun the upcoming holidays in advance. In summary, it is expected that nickel prices may continue to fluctuate in the future.
Copper
Copper prices down on rebounding US dollar index
LME copper prices opened at $8127/mt and closed at $8106.5/mt last evening, down 0.52%. Trading volume was 21,000 lots and open interest stood at 267,000 lots. The most active SHFE 2311 copper contract prices opened at 67190 yuan/mt and closed at 67280 yuan/mt last evening, a drop of 0.34%, with the high-end of 67440 yuan/mt and the low-end of 67050 yuan/mt. Trading volume was 31,000 lots, and open interest stood at 151,000 lots. On the macro front, Minneapolis Fed President Neel Kashkari expects to raise interest rates again this year and then leave them unchanged. In addition, he believes there is a 40% chance that the Fed will have to significantly raise interest rates to curb inflation. The US dollar index posted a six-day winning streak, putting pressure on copper prices. In terms of fundamentals, transaction activity in East China has begun to decline yesterday. Although copper prices continued to shift downward, due to the relatively abundant supply of goods, purchasers had strong dominance. And the market preferred front-month invoices; inventories in South China stopped falling and rebounded, but the increase was small. The supply of goods available for circulation in the market was still insufficient. In terms of consumption, as of yesterday, market replenishment was basically completed, and demand growth is expected to decline in the remaining two days before the holidays. It is expected that copper prices will still have room to decline in the near future.
Aluminum
Overnight, the most-traded SHFE 2311 aluminum contract opened at 19,405 yuan/mt, with its lowest and highest at 19,350 yuan/mt and 19,440 yuan/mt before closing at 19,400 yuan/mt, up 65 yuan/mt or 0.34% compared with the previous trading day. LME aluminum opened at $2,249.5/mt on Tuesday, with its high and low at $2,249.5/mt and $2,222/mt respectively before closing at $2,241/mt, an increase of $7/mt or 0.31%.
On the macro front, the Federal Reserve announced the suspension of interest rate increases in September. However, considering the poor economic situation in Europe and the United States, the Fed's members may still push interest rate hikes. Domestic macroeconomic sentiment remained stable. On a fundamental level, 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. But aluminum stocks remain low amid resilient domestic downstream consumption. Short-term low inventory and low warehouse receipts will support aluminum prices, though. SHFE aluminum contract is anticipated to oscillate at a high level. Follow-up attention should be paid to domestic aluminum inventory and downstream consumption.
Lead
SMM lead morning comments
SHANGHAI, Sep 27 (SMM) -
LME lead prices opened at $2181/mt and gained $1/mt or 0.05% to settle at $2183/mt in last evening, with the high-end of $2203/mt.
The most active SHFE 2311 lead contract prices opened at 16820 yuan/mt and touched 16825 yuan/mt before closing at 16755 yuan/mt, down 30 yuan/ 0.18%.
Zinc
Federal Reserve's hawkish speech weighed down LME zinc prices
Overnight, LME zinc opened at $2,530/ton and reached a high of $2,570/ton. The contract finally closed down at $2,512.5/ton, down $19.5/ton, or 0.77%, with trading volume of 9293 lots and open interest were 226,000 lots. LME zinc stocks increased by 5975 tons to 107525 tons. The increase was 5.88%. Federal Reserve officials stated that the possibility of a soft landing in the United States is 60%, and there is a 40% possibility that interest rates will need to be significantly raised. The speech was hawkish and drove the dollar index to rise. Nonferrous metals were under pressure.
Last evening, the most active SHFE 2311 zinc contract prices opened at 21830 yuan/mt before closing at 21575 yuan/mt, down 265 yuan/mt or 1.21%. Trading volume was 83,900 lots, and open interest were 126,000 lots. Spot trading was quiet.
Tin
SHFE 2310 tin contract rose slightly after opening on yesterday’s night session and fell back to a relatively low of 221,070 yuan/mt, then maintained a sideways fluctuation and finally closed at 221,030 yuan/mt, up 0.12%.
Spot premiums and discounts barely changed yesterday. Small brand tin ingots were offered at a discount of 200 yuan/mt to a premium of 200 yuan/mt, premiums of 300-600 yuan/mt for delivery brands, premiums of 800-1,100 yuan/mt for Yunxi brands, and discounts of 500-600 yuan/mt for imported tin brands. Although tin prices fell slightly yesterday, the overall purchasing intention of downstream companies was even more sluggish than the day before due to their inventory replenishment in advance. Most reported that there were no transactions or few transactions, and only imported tin and small brands with large discounts were acceptable for shipment.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 156,690 yuan/mt, and closed at 155,200 yuan/mt, up 950 yuan/mt. Trading volume dropped by 31,025 lots, and open interest increased by 6,146 lots. On the macro front, market attention should be paid to the data of the US unemployment benefits application number, which reflects the current activity of the US job market and thereby affects market expectations for subsequent interest rate hikes by the Fed. In the fundamentals, yesterday’s spot market transactions were muted as some enterprises have begun the upcoming holidays in advance. In summary, it is expected that nickel prices may continue to fluctuate in the future.
Market forecast
Market review
For queries, please contact William Gu at williamgu@smm.cn
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