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SMM Morning Comment For SHFE Base Metals September 28

iconSep 28, 2023 09:51
Copper prices moved at lows as US dollar index stayed high

SHANGHAI, Sep 28 (SMM) –
Copper prices moved at lows as US dollar index stayed high
LME copper prices opened at $8100.5/mt and closed at $8082/mt last evening, down 0.33%. Trading volume was 17,000 lots and open interest stood at 269,000 lots. The most active SHFE 2311 copper contract prices opened at 67110 yuan/mt and finished at 67190 yuan/mt last evening, up 0.01%, with the low-end of 67110 yuan/mt and the high-end of 67350 yuan/mt. Trading volume was 23,000 lots, and open interest stood at 152,000 lots. On the macro front, US durable goods orders increased by 2% month on month in August, compared to a drop of 0.5% expected by the market. There were signs that business equipment spending was regaining some momentum after falling early in the third quarter, suggesting investment remained strong despite rising borrowing costs. In terms of fundamentals, transaction enthusiasm in East China dropped significantly yesterday as some downstream buyers had completed stockpiling and continued deliveries by smelters during holidays. It is expected that market activity will continue to decline today. In South China, due to the limited arrivals of goods, the inventory dropped significantly yesterday. The sellers offered goods at a high price, but the downstream acceptance was not high. Demand is expected to continue to shrink. The copper prices will remain at low levels before the holidays.
Overnight, the most-traded SHFE 2311 aluminum contract opened at 19,420 yuan/mt, with its lowest and highest at 19,400 yuan/mt and 19,500 yuan/mt before closing at 19,470 yuan/mt, up 50 yuan/mt or 0.26% compared with the previous trading day. LME aluminum opened at $2,239.5/mt on Wednesday, with its high and low at $2,246.5/mt and $2,220/mt respectively before closing at $2,237.5/mt, a decrease of $3.5/mt or 0.16%.
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. Overall, short-term low inventory and low warehouse receipts will support aluminum prices before the National Day holiday. SHFE aluminum contract is anticipated to oscillate at a high level. Follow-up attention should be paid to domestic aluminum inventory and downstream consumption.
SMM lead morning comments
SHANGHAI, Sep 28 (SMM) -
Overnight, LME lead prices opened at $2182/mt and closed at $2151/mt, down $32/mt, or 1.47%. Bears increased their positions.
The most active SHFE 2311 lead contract prices opened at 16530 yuan/mt and touched 16625 yuan/mt before closing at 16560 yuan/mt, down 140 yuan/mt or 0.84%.
Stronger US dollar weighed on LME zinc prices
Overnight, LME zinc prices opened at US$2518/mt and dropped to a low of US$2472.5/mt, and finally closed down at US$2493/mt, down US$19.5/mt, a decrease of 0.78%. The trading volume reached 10285 lots, and the open interest reached 224,000 lots. LME zinc inventories decreased 450 mt to 107075 mt, a drop of 0.42%. U.S. durable goods orders in August exceeded expectations by 0.2%. The U.S. dollar index strengthened again, and non-ferrous metals were under pressure.
Overnight, the most active SHFE 2311 zinc contract prices opened at 21520 yuan/mt. At the beginning of the trading, short positions were reduced. It finally closed down at 21,435 yuan/mt, down 155 yuan/mt, or 0.72%. The trading volume reached 68,900 lots, and the open interest reached 116,000 lots. SHFE zinc prices will move at lows as investors are cautious ahead of holidays.
SHFE 2311 tin contract maintained sideways after opening on yesterday’s night session and then moved weakly before finally closing at 217,460 yuan/mt, down 1.19%. Spot premiums and discounts barely changed yesterday. Small brand tin ingots were offered at premiums of 0-300 yuan/mt, premiums of 300-600 yuan/mt for delivery brands, premiums of 800-1,100 yuan/mt for Yunxi brands, and discounts of 400-500 yuan/mt for imported tin brands. There are also many forward quotations for imported tin ingots in October with discounts of 1,000-1,500 yuan/mt. Previously, downstream companies had basically completed tin ingot replenishment. SHFE tin prices dropped again yesterday, encouraging a few downstream companies to continue to purchase but with limited quantity. Most traders reported that the shipment yesterday morning was flat at 20 mt or even below.
Overnight, the most-traded SHFE nickel contract opened at 154,800 yuan/mt, and closed at 149,990 yuan/mt, down 5210 yuan/mt. Trading volume rose by 32,493 lots, and open interest increased by 11,973 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.

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