SMM Evening Comments (Sep 13): Shanghai Nonferrous Metals Closed with Gains amid Expected Easing US Rate Hike

SHANGHAI, Sep 13 (SMM) – Shanghai nonferrous metals closed with gains amid expected easing US rate hike as the market believes that the US inflation may have topped.

Shanghai copper rose 1.46%, aluminium added 0.13%, lead gained 1.3%, zinc jumped 1.58%, tin advanced 1.44%, and nickel climbed 5.91%.

Copper: The most-traded SHFE 2210 copper closed up 1.46% or 910 yuan/mt at 63,190 yuan/mt, with open interest down 2,665 lots to 159,448 lots.

On the macro front, the European Central Bank remained hawkish last week, boosting the euro; the United States inflation data will be released today at 20:30 Beijing time, and the market consensus is that August core consumer price index (CPI) up 0.3% from the previous month, the same growth as in July. As the market expects that the topping inflation will prevent the US Fed from adhering to aggressive rate hikes. As such, falling US dollar index put less pressure on the copper futures.  

In the spot market, the traders quoted standard-quality copper with a high premium of 300 yuan/mt to test the market response, but the level was already too high for the buyers when SHFE front-month and next-month contract spread was nearly 600 yuan/mt. The premiums then fell quickly to 200-280 yuan/mt first and then stabilised at around 180-190 yuan/mt. However, the transactions failed to pick up. The premiums of good-quality copper was around 300 yuan/mt amid scarce supply.

Aluminium: The most-traded SHFE 2210 aluminium closed up 0.13% or 25 yuan/mt to 18,765 yuan/mt, with open interest down 822 lots to 173,842 lots.

The aluminium ingot social inventories across China’s eight major markets totalled 696,000 mt as of September 13, up 24,000 mt from last Thursday and 13,000 mt from the end of August. However, the figure was 49,000 mt lower than in the same period last year.

Smelters in Sichuan are now resuming their production, but at a slow pace. The government of Yunnan has not yet issued any written notice of output cuts to local smelters, with only a few receiving verbal notice about 10-20% output reduction.

Lead: The most-traded SHFE 2210 lead closed up 1.3% or 195 yuan/mt at 15,145 yuan/mt, with open interest up 448 lots to 47,348 lots.

In the spot market, the transactions were mostly made with discounts after SHFE lead price rose today. In terms of secondary lead, a number of smelters reduced the production or were under maintenance. The lead ingot tightened in some regions, which bolstered lead prices. However, the overall supply is expected to grow significantly after the smelters completed the maintenance and technical upgrade. As such, short-term lead prices will remain rangebound.

Zinc: The most-traded SHFE 2210 zinc closed up 1.58% or 385 yuan/mt at 24,825 yuan/mt, with open interest up 1,787 lots to 118,621 lots.

On the fundamentals, SHFE/LME price ratio rose gradually, and the import window for zinc concentrate opened, easing the supply tightness in China. The support on the supply side weakened. In the spot market, the social inventory stopped falling and rallied with a gain of 1,400 mt from last Friday. On the whole, the fundamentals are now unable to offer strong support to zinc prices.

Tin: The most-traded SHFE 2210 tin closed up 1.44% or 2,580 yuan/mt at 181,270 yuan/mt, with open interest down 1,080 lots to 34,519 lots.

In the spot market, the quotes offered by smelters diverged in morning trade; some smelters raised the quotes along with rising SHFE tin price, while some held the prices firm. The number of quotes from the traders was still relatively low, and the spot premiums also dropped slightly amid growing SHFE tin price. The spot market was lacklustre today, and the falling premiums slightly boosted the market transactions. The downstream still purchased on rigid demand post the Mid-Autumn Festival, and the buyers were increasing wait-and-see after SHFE price climbed. 

Nickel: The most-traded SHFE 2210 nickel closed up 5.91% or 10,710 yuan/mt at 191,800 yuan/mt, with open interest down 10,248 lots to 81,994 lots.

In the spot market, Jinchuan nickel was in premiums of 7800-8,000 yuan/mt today, an average of 7,900 yuan/mt, down 600 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 2,800-3,500 yuan/mt, an average of 3,150 yuan/mt, down 100 yuan/mt from the previous trading day. Spot pure nickel premiums fell slight amid rising SHFE nickel price, but the market transactions were still muted. For nickel briquette, the prices stood at 192,500-194,000 yuan/mt, up 8,250 yuan/mt from the previous trading day, weakening its cost efficiency.

[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.]