SMM Morning Comment For SHFE Base Metals On September 26

Published: Sep 26, 2024 09:51 (GMT+8)

Source: SMM

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Overnight, LME copper opened at $9,758.5/mt.

SHANGHAI, September 26 (SMM) –

Copper

Overnight, LME copper opened at $9,758.5/mt, initially dipped to $9,752/mt, then rose to a high of $9,873.5/mt during the session, and finally dropped back slightly to close at $9,801/mt, down 0.2%. Trading volume reached 25,000 lots, and open interest was 284,000 lots. Overnight, the most-traded SHFE copper contract 2411 opened at and dipped to 77,210 yuan/mt, initially rose to a high of 77,820 yuan/mt, then fluctuated rangebound and finally closed at 77,330 yuan/mt, down 0.13%. Trading volume reached 46,000 lots, and open interest was 169,000 lots. Macro side, the US will release weekly initial jobless claims and August core PCE in the next two days, which may provide more market guidance. Before the data release, the US dollar index rebounded, putting pressure on copper prices. Additionally, the prospect of Libya's supply recovery and persistent demand concerns led to weaker international crude oil prices, dragging copper prices down. Fundamentally, supply side, as copper prices continued to rise, traders' pessimism about future spot consumption resurfaced, leading to a noticeable increase in concentrated shipments. Copper cathode spot supply increased, and spot premiums/discounts were under pressure. Demand side, with few trading days left before the National Day holiday, downstream demand has significantly slowed due to high copper prices, focusing on restocking as needed, with overall consumption performance being mediocre. Price side, copper prices are expected to stabilize before the release of key US economic data.

Aluminum

Futures market: Overnight, the most-traded SHFE aluminum 2411 contract opened at 20,010 yuan/mt, reached a high of 20,125 yuan/mt and a low of 20,010 yuan/mt, and closed at 20,050 yuan/mt, down 5 yuan/mt, a decrease of 0.02%. On the previous trading day, LME aluminum opened at $2,557/mt, hit a high of $2,580/mt and a low of $2,516/mt, and closed at $2,539/mt, down $17/mt, a decrease of 0.67%.

Summary: Macro front, due to the domestic monetary policy exceeding expectations, positive resonance formed at home and abroad, significantly boosting market confidence and driving up non-ferrous metals. Additionally, US Fed officials are divided on the November rate cut expectations, awaiting employment and inflation data to be released on Thursday and Friday. Fundamentals side, recently, aluminum plants in Sichuan plan to start production, slightly increasing domestic aluminum supply, while alumina prices fluctuate upward, providing cost support to domestic aluminum prices. As the National Day holiday approaches, downstream just-in-time replenishment is concentrated, with domestic aluminum ingot inventory showing good destocking performance and downstream operations gradually recovering. However, caution is needed regarding post-holiday inventory accumulation risks. Overall, both domestic and international macro conditions are favorable, with stable to improving downstream operations during the domestic consumption peak season. With pre-holiday market demand for concentrated replenishment, domestic aluminum inventory is expected to continue declining, and the aluminum market is anticipated to maintain a fluctuating upward trend in the short term.

Lead

Overnight, LME lead opened at $2,082/mt. During the Asian session, the market was quiet, with LME lead consolidating between $2,085 and $2,090/mt. Entering the European session, a stronger dollar pressured down non-ferrous metals, causing LME lead to dip below $2,060/mt. However, with LME lead inventory continuing to decline, prices rebounded, maintaining a recent upward fluctuation, and finally closed at $2,102.5/mt, up 1.06%, marking a new high for the month.

Overnight, the most-traded SHFE lead 2411 contract opened at 16,555 yuan/mt. SHFE lead warehouse warrant inventory decreased, and SHFE lead opened low and trended high. The tug-of-war between longs and shorts intensified during the session, with SHFE lead mostly consolidating between 16,650 and 16,700 yuan/mt and finally closing at 16,695 yuan/mt, up 0.03%. The open interest reached 46,142 lots, an increase of 919 lots from the previous trading day.

Macro side, the State Council prioritized high-quality full employment as a key goal for economic and social development, promoting reasonable growth in labor compensation. The PBoC cut rates by 30 basis points and conducted a 300 billion yuan one-year MLF operation. The National Development and Reform Commission noted that China's major household appliance ownership exceeded 3 billion units, and vehicle ownership surpassed 300 million units, indicating significant potential for upgrades.

Fundamentally, before the National Day holiday, downstream lead-acid battery companies restocked lead ingots as needed, with SHFE lead warehouse warrant inventory decreasing daily this week, supporting a pre-holiday upward fluctuation in lead prices. Additionally, in October, maintenance at primary and secondary lead smelters is expected to conclude, combined with the release of new lead ingot capacity, leading to a high expected increase in lead ingot supply. We need to monitor the match between scrap and other raw material supplies and ingot output.

Zinc

Overnight, LME zinc opened at $3,009.5/mt. Initially, SHFE zinc fluctuated around the daily average, reaching a high of $3,040/mt. Subsequently, LME zinc fluctuated downward below the daily average. During European trading hours, bulls increased positions, causing LME zinc to slightly rise to fluctuate around $3,000/mt. However, as bulls took profits and exited, LME zinc's focus shifted downward to a low of $2,980/mt. Later, LME zinc fluctuated upward to $3,025/mt. Entering the night session, LME zinc plunged below the daily average, closing down at $2,988.5/mt, a decrease of $22/mt, or 0.73%. Trading volume increased to 107,000 lots, and open interest increased by 2,429 lots to 242,000 lots. Overnight, LME zinc recorded a long upper shadow bearish candlestick, with support from various moving averages below. LME social inventory decreased by 1,725 mt to 255,225 mt, a reduction of 0.67%. Current international local disputes remain tense, with the Lebanon-Israel conflict intensifying. The U.S. Congress passed a temporary funding bill to avoid a government shutdown. It is expected that LME zinc may maintain a fluctuating trend today.

Overnight, the most-traded SHFE zinc 2411 contract opened at 24,445 yuan/mt. Initially, bulls increased positions, causing SHFE zinc to fluctuate upward above the daily average, reaching a high of 24,635 yuan/mt. Subsequently, as bulls took profits and exited, SHFE zinc plunged downward below the daily average. During the session, bears increased positions, causing SHFE zinc to fluctuate downward, reaching a low of 24,400 yuan/mt at the end of the session. It closed down at 24,410 yuan/mt, a decrease of 55 yuan/mt, or 0.22%. Trading volume decreased to 84,487 lots, and open interest decreased by 932 lots to 112,000 lots. Overnight, SHFE zinc recorded a long upper shadow bearish candlestick, with the upper Bollinger Band forming resistance and various moving averages providing support below. Currently, the supply side remains tight, and the demand side has not shown significant improvement. However, entering the traditional peak season and the real estate favorable policies boosting long-term demand, SHFE zinc may fluctuate upward today.

Tin

In the night session yesterday, the most-traded SHFE tin contract closed at 255,040 yuan/mt, down 5,820 yuan/mt, a decrease of 2.23%, with a high of 259,400 yuan/mt and a low of 254,380 yuan/mt.

During yesterday's morning session, trading companies quoted domestic tin ingot brands with 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 brand at premiums of 200-700 yuan/mt against the SHFE 2410 contract, Yunnan Tin brand at premiums of 600-800 yuan/mt against the SHFE 2410 contract, and imported tin brand at discounts of 600-200 yuan/mt against the SHFE 2410 contract. In the morning session yesterday, tin prices fluctuated downward, prompting some downstream and end-user companies to actively restock after the price drop. Some trading companies completed transactions of 20-30 mt, while others traded 2-3 truckloads. Overall, the spot market was quite active yesterday.

Nickel

On September 25, Jinchuan nickel was reported at a premium of 1,600-1,800 yuan/mt, with an average of 1,700 yuan/mt, down 50 yuan/mt from the previous trading day. Norilsk nickel was quoted at a discount of 300-100 yuan/mt, with an average of 200 yuan/mt, up 25 yuan/mt from the previous trading day. On the morning of September 25, the futures market fluctuated, and spot premiums narrowed compared to the previous working day. Nickel briquette prices were 126,750-127,200 yuan/mt, up 2,550 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was approximately 111.36 yuan/mt (nickel sulphate prices were 111.36 yuan/mt lower than nickel briquette prices).

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