SMM Evening Comments (Sep 8): Shanghai Nonferrous Metals Closed with Gains

SHANGHAI, Sep 8 (SMM) – Shanghai nonferrous metals closed mostly with gains. Overnight US dollar index dropped after hitting high, which did not put further pressure on the base metals. Nonetheless, the US monetary policy in September is still expected to be hawkish.

Shanghai copper rose 0.3%, aluminium added 1.64%, lead gained 0.47%, zinc jumped 0.63%, tin advanced 0.92%, and nickel climbed 1.55%.

Copper: The most-traded SHFE 2210 copper closed up 0.3% or 180 yuan/mt at 61,150 yuan/mt, with open interest down 2,130 lots to 161,574 lots.

On the macro front: (1) The annualised Eurozone GDP finalised at 4.1% in Q2, against a previous print of 3.9% and a forecast of 3.9%. (2) China's trade account for August was 5359.1, against a previous reading of 6826.9 and a forecast of 6618.5.

In the spot market, standard-quality copper was in premiums of 400-410 yuan/mt in early trade, and the spread between good and standard-quality copper stood at around 20 yuan/mt. The brand Guixi was mostly quoted with premiums of 440-460 yuan/mt. The scarce supply of spot goods as well as failing copper import expectations prompted the traders to hold the premiums firm. But based on the actual transactions, the buyers and sellers differed greatly on the premiums level. Nonetheless, some traders believed that the high premiums of extend as the social inventory in Shanghai did not rise. The market players shall watch the follow-up import of copper.

Aluminium: The most-traded SHFE 2210 aluminium closed up 1.64% or 300 yuan/mt to 18,605 yuan/mt, with open interest up 5,127 lots to 166,710 lots.

Aluminium prices gained support from linger pressure from overseas energy crisis on smelting activities, and the expected power rationing in Yunnan will probably reduce domestic production. But the traditional seasonal high in September and October is worth attention.

Lead: The most-traded SHFE 2210 lead closed up 0.47% or 70 yuan/mt at 15,110 yuan/mt, with open interest down 3,510 lots to 48,191 lots.

The most-traded lead contract rose with shorts reducing the positions. In the spot market, Sichuan was still locked down for covid control, and the local shipments were still affected. News of production cuts were heard in Jiangxi, Jiangsu and Anhui, hence lead ingot supply is likely to fall in the near future, offering support to lead prices.

Zinc: The most-traded SHFE 2210 zinc closed up 0.63% or 150 yuan/mt at 24,145 yuan/mt, with open interest down 2,777 lots to 112,516 lots.

On the fundamentals, the downstream was active in restocking ahead of the Mid-Autumn Festival. The social inventory dropped palpably amid relatively robust market transactions, support zinc price. However, the actual demand did not improve substantially from the terminal end, and the market players shall keep watching the sustainability of current robust transactions.

Tin: The most-traded SHFE 2210 tin closed up 0.92% or 1,610 yuan/mt at 177,520 yuan/mt, with open interest down 1,359 lots to 36,440 lots.

In the spot market, the smelters retained their interest in making quotes in morning trade, but the spread among the quotes expanded slightly as some smelters were less firm to their prices. The number of quotes from the traders was still low, and the premiums were at the short-term high. The spread between different brands narrowed amid short supply of some non-deliverable brands. The overall transactions were modest, and the downstream still purchased on rigid demand.

Nickel: The most-traded SHFE 2210 nickel closed up 1.55% or 2,670 yuan/mt at 175,020 yuan/mt, with open interest down 429 lots to 76,344 lots.

In the spot market, Jinchuan nickel was in premiums of 9,500-10,000 yuan/mt today, with an average of 9,750 yuan/mt, down 500 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 3,500-3,800 yuan/mt, with an average of 3,650 yuan/mt, down 300 yuan/mt on a daily basis. The spot premiums kept falling today, but the absolute prices were still high as the futures prices rose. The spot market was quiet today. For nickel briquette, the prices stood at 178,700-179,300 yuan/mt, up 2,100 yuan/mt from a day ago. The demand for briquette is expected to pick up as it has restored its cost efficiency, and as the steel mills are likely to resume the production.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]