SMM Evening Comments (Sep 21): Shanghai nonferrous metals closed mostly higher, nickel fell 1.99%

SHANGHAI, Sep 21 (SMM) — SHFE nonferrous metals rose for the most part on Monday September 21 as investors monitored progress toward a new coronavirus relief bill.

U.S. government debt prices were mixed in the early hours of Monday morning, with investors monitoring progress toward a new coronavirus relief bill and a slew of Federal Reserve speakers scheduled this week.

At around 2:05 a.m. ET, the yield on the benchmark 10-year Treasury note was lower at 0.6871% and the yield on the 30-year Treasury bond was up marginally at 1.4551%. Yields move inversely to prices.

Lead, the best performer, rose 1.99%, aluminium advanced 0.58%, zinc climbed 0.13%, tin went up 1.87% and copper gained 0.37%, while nickel edged down 1.99%.

SMM data showed that social inventories of refined zinc ingots across Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Shandong and Hebei fell 700 from last Friday September 18 to 160,100 mt as of Monday September 21. The stocks were down 6,100 mt from last Monday September 14.

The ferrous complex fell across the board. Hot-rolled coil fell 1.37%, rebar shed 1.59% and iron ore went down 2.88%.

Copper: Long positions of 2011 contract has exceeded that of 2010 contract today, and SHFE Copper has gradually completed the rolling.

The most-traded SHFE 2011 copper contract finished the day 0.37% higher at 52,190 yuan/mt today. The contract opened higher and went lower as oil prices dropped. Combined with China’s one-year and five-year Loan Prime Rate (LPR) announced by the People's Bank of China (PBOC) today the same as that of the previous period, investors' risk aversion rebounded, which also limited the increase of copper prices to a certain extent. Whether the contract could maintain its upward trend will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2010 aluminium contract closed up 0.58% at 14,665 yuan/mt. Open interest fell 1,266 lots to 12,000 lots. The transfer of main contract long positions and the flow of the fund will come under scrutiny in late September.

Zinc: The most-active SHFE 2011 zinc contract fell to an intraday low of 19,785 yuan/mt and finished the day 0.13% higher at 19,820 yuan/mt. The contract generated a V-shaped movement on Monday. Open interest rose 2,139 lots to 77,339 lots. High zinc prices suppressed the consumption and the upward momentum of zinc prices is temporarily limited. However, the higher US dollar index in European trading hours suppressed the commodity trend, and the contact is expected to fall slightly tonight.

Nickel: The most-traded SHFE 2011 nickel contract finished the day 1.99% weaker at 114,100 yuan/mt today. Open interest rose 1,780 lots to 117,855 lots. The contract is expected to trade between 114,000-120,000 yuan/mt this week.

Lead: The most-traded SHFE 2010 lead contract climbed to an intraday high of 15,450 yuan/mt in afternoon trading and finished the day 1.99% higher at 15,370 yuan/mt. Open interest fell 3,719 lots to 15,147 lots. The downstream consumption of fundamentals is sluggish with limited upward momentum of lead prices. Whether the contract could move above 15,400 yuan/mt will be watched tonight.

Tin: The most-liquid SHFE 2011 tin contract ended 1.87% higher at 145,050 yuan/mt today. Open interest fell 1,817 lots to 21,016 lots. Demand is improved before the National Day holidays, with active market sentiment. Pressure above is expected to around 148,000 yuan/mt.