SMM Morning Comment For SHFE Base Metals On September 11

SHANGHAI, September 11 (SMM) –

Copper

Last night, LME copper opened at $9,068/mt, initially reaching a high of $9,086/mt before descending throughout the session, hitting a low of $8,983/mt mid-session, then slightly rebounding towards the close to finish at $9,019/mt, a decline of 0.85%. Trading volume reached 15,000 lots, and open interest was 281,000 lots. Overnight, the most-traded SHFE copper 2410 contract opened and peaked at 72,870 yuan/mt, initially dropped to a low of 72,250 yuan/mt, then fluctuated rangebound, and finally closed at 72,510 yuan/mt, down 0.47%. Trading volume reached 45,000 lots, and open interest was 155,000 lots. Macro front, OPEC has reduced its forecast for global crude oil demand growth for this year and the next to 2.03 million barrels per day (bpd) and 1.74 million bpd, respectively, overshadowing supply concerns caused by Tropical Storm Francine and leading to a significant drop in international oil prices, followed by a decrease in copper prices. On the fundamentals, supply side, due to the price spread between front-month and next-month contracts turning into a backwardation structure, traders showed a strong willingness to sell. In addition, with the substantial arrival of imported hydro and non-registered copper, copper cathode supply increased. Consumption side, as copper prices fluctuated upward yesterday, downstream turned cautious on stockpiling, primarily restocking as needed. However, with only three working days left before the Mid-Autumn Festival restocking period, consumption is expected to increase. On the price front, the market remains jittery ahead of tonight's release of U.S. inflation data, and copper prices are expected to continue fluctuating at low levels.

Aluminum

Futures: The most-traded SHFE aluminum 2410 contract opened at 19,350 yuan/mt overnight, reaching a peak of 19,385 yuan/mt and a low of 19,275 yuan/mt, and closed at 19,310 yuan/mt, down 80 yuan/mt (-0.41%). On Tuesday, LME aluminum opened at $2,364/mt, with a high of $2,375/mt and a low of $2,332.5/mt, closing at $2,342/mt, down $20.5/mt (-0.87%).

Summary: On the macro side, the US Fed's rate cut in September is almost certain, China continues to boost consumption, and the hot war situation presents new variables. On the fundamentals side, overseas supply experiences production cuts while the peak consumption season boosts demand. Therefore, social inventories start to deplete. In the short term, aluminum prices may fluctuate upward driven by fundamentals, but the sustainability of the consumption recovery and changes in supply capacity need to be observed in the future.

Lead

Overnight, LME lead opened at $1,952.5/mt. In the Asian session, it fluctuated downward to $1,949/mt. Entering the European session, it rose to a high of $1,967.5/mt before declining again, closing at $1,955/mt, down $3/mt, a decrease of 0.15%.

Overnight, the most-traded SHFE lead 2410 contract opened at 16,410 yuan/mt, initially declining to 16,345 yuan/mt before rebounding to a high of 16,545 yuan/mt. It eventually closed at 16,415 yuan/mt, up 40 yuan/mt, an increase of 0.24%.

Macro side, the US dollar index stabilized as the market awaited key inflation data and developments in the US election. Fundamentals side, expectations of maintenance at primary lead smelters were realized, and production and shipment enthusiasm among secondary lead smelters severely weakened. Many secondary refined lead producers held firm on prices and refrained from selling. In early September, orders from some downstream enterprises slightly improved, and essential procurement demand gradually increased compared to August. Further attention is needed to see if downstream operating performance boosts lead prices to halt the decline.

Zinc

Overnight, LME zinc opened at $2,736/mt. During the morning session, LME zinc fluctuated narrowly around the daily average line, peaking at $2,740/mt at the beginning of the session. It then rapidly declined by midday, fluctuating near $2,695/mt and dipping to a low of $2,679/mt during the period. By the end of the session, LME zinc slightly recovered to near the daily average line, ultimately closing at $2,707/mt, a decrease of $24.5/mt or 0.90%. The trading volume decreased to 9,889 lots, and open interest increased by 2,521 lots to 235,000 lots. Overnight, LME zinc recorded a bearish candlestick with the upper 5-day moving average serving as resistance. LME zinc inventory decreased by 2,100 mt to 234,450 mt, down 0.89%. The market is still awaiting the release of subsequent US inflation data to seek clues on future rate cut extents. The US dollar index fluctuated at a high level, keeping LME zinc at a low level.

Overnight, the most-traded SHFE zinc 2410 contract opened at 22,760 yuan/mt. After the opening, SHFE zinc briefly declined to a low of 22,565 yuan/mt. It then rebounded from the low, reaching a high of 22,820 yuan/mt, and subsequently maintained a fluctuating trend above the daily average line, ultimately closing at 22,725 yuan/mt, a decrease of 65 yuan/mt or 0.29%. The trading volume increased to 103,000 lots, and open interest increased by 1,423 lots to 89,021 lots. Overnight, SHFE zinc recorded a bearish candlestick with the upper 10-day moving average serving as resistance. Macro sentiment remained unchanged, and the weak supply-demand pattern continued on the fundamental side, with downstream zinc consumption still sluggish. SHFE zinc fluctuated, with attention on subsequent domestic consumption improvement.

Tin

In yesterday's night session, the most-traded SHFE tin contract closed at 250,590 yuan/mt, down 1,640 yuan/mt, a decrease of 0.65%, with the highest price at 251,930 yuan/mt and the lowest at 248,540 yuan/mt.

During yesterday's morning session, quotes from trading companies for various domestic tin ingot brands showed little change compared to recent days. Small brand tin ingots were quoted at premiums of 0-500 yuan/mt against the SHFE 2410 contract, delivery brands at premiums of 200-700 yuan/mt, Yunnan Tin brand at premiums of 200-800 yuan/mt, and imported tin brands at discounts of 300-200 yuan/mt against the SHFE 2410 contract. Yesterday morning, tin prices fluctuated rangebound, with most downstream enterprises adopting a wait-and-see attitude. However, during the night session, tin prices fell, prompting some downstream enterprises to conduct modest stock replenishment or place low-priced orders. Most trading enterprises reported sporadic transactions, with a few trading a full truckload. Overall, activity in the night session spot market increased.

Nickel

On September 10, Jinchuan nickel was quoted at a premium of 1,700-1,900 yuan/mt, with an average of 1,800 yuan/mt, up 100 yuan/mt from the previous trading day. Norilsk nickel was quoted at a discount of 300 yuan/mt to a premium of 100 yuan/mt, with an average discount of 200 yuan/mt, up 50 yuan/mt from the previous trading day. On the morning of September 10, the futures market showed a volatile downward trend, but the spot premiums overall increased slightly from the previous working day. Nickel briquette prices were 119,300-119,600 yuan/mt, down 1,150 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 8,050 yuan/mt (nickel sulphate prices were higher by 8,050 yuan/mt compared to nickel briquette prices).