SMM Morning Comment For SHFE Base Metals September 1

SHANGHAI, Sep 1 (SMM) –

Copper

LME copper prices opened at $8402.5/mt and closed with a drop of 0.37% at $8437/mt last evening, with the low-end of $8380/mt and the high-end of $8467.5/mt. Trading volume stood at 15,000 lots. Open interest stood at 279,000 lots. The most active SHFE 2310 copper contract prices opened at 69380 yuan/mt and finished at 69230 yuan/mt overnight, down 0.36%, with the low-end of 69110 yuan/mt. Trading volume was 23,000 lots and open interest stood at 157,000 lots. On the macro front, data showed that the U.S. core PCE price index increased moderately as expected, but inflation-adjusted personal consumption expenditures increased more than expected month-on-month, and the U.S. dollar index rebounded. In terms of fundamentals, spot quotes in east China rose with futures contract prices yesterday. Market activity on the last day of the month was still dominated by traders, seeking low-priced supply to prepare for September. Downstream processing companies only purchased as required due to fear of high prices. The market spot resources were not abundant, pushing up premiums. Inventories in south China ended ten consecutive days of declines, mainly due to light consumption at the end of the month. In terms of consumption, demand has performed poorly under high copper prices and may improve in early September. In terms of price, sentiment at home and abroad has been optimistic recently, and copper prices are expected to remain high.

Aluminum

Overnight, the most-traded SHFE 2310 aluminium contract opened at 18,975 yuan/mt, with the lowest and highest prices at 18,930 yuan/mt and 19,025 yuan/mt before closing at 18,985 yuan/mt, up 50 yuan/mt or 0.26% from the previous trading day. LME aluminium opened at $2,201.5/mt on Wednesday with its high and low at $2,229/mt and $2,199.5/mt respectively before closing at $2,201/mt, a slight decrease of $0.5/mt or 0.02% from the previous trading day.

On the macro side, frequent domestic favorable policies continued to wield boosting effects. In the fundamentals, aluminum ingot inventories remained low, and market expectations for consumption improvement in September may bring certain support to prices to aluminum prices. Domestic aluminum market maintained a state of simultaneous increase in supply and demand. The proportion of molten aluminum output remained high. The influx of imported aluminum ingots after the import window opened and the release of Southwest capacity may impede destocking progress. Overall, the imbalance between supply and demand is not prominent. Aluminum prices may fluctuate upward amid positive macro front. In the follows-up, market participators still need to pay attention to changes in domestic aluminum inventories and downstream recovery.

Lead

Overnight, LME lead prices opened at $2179/mt Entering the European session, LME lead reached a maximum of $2,228/mt, once again setting a seven-month high. The contract closed at $2223/mt, up 2.4%.

Overnight, the most active SHFE 2310 lead contract prices opened at 16,385 yuan/mt. Lead ingot warrants decreased, and bulls added positions, pushing up SHFE lead prices to 16810 yuan/mt. The contract closed at 16700 yuan/mt, an increase of 2.3%. Open interest stood at 106,000 lots, a growth of 5541 lots from the previous trading day. In addition, the total positions of SHFE lead exceeded 200,000 lots, setting a new high in history.

Zinc

Overnight, LME zinc prices opened at $2,435/mt and finally closed down at $2,434/mt, down $4.0/mt, or 0.16%, with the low-end of $2416.5/mt and the high-end of $2455.5/mt. Trading volume reached 9,582 lots and open interest were 198,000 lots. LME zinc inventories increased by 6,100 mt or 4.13% to 153,976 mt. LME inventories increased and overseas demand remained weak. The initial annual CPI rate in the Eurozone in August was higher than expected at 5.3%. Initial jobless claims in the United States were 228,000. The personal expenditures in the United States in July was 0.8%. Inflation further strengthened and interest rate hikes were expected, weighing on non-ferrous metals prices.

Overnight, SHFE zinc prices opened at 21,000 yuan/mt and finally closed down at 20,960 yuan/mt, down 40 yuan/mt, or 0.19%. The trading volume reached 70,917 lots, and the open interest reached 108,000 lots. There has been no significant recovery in terminal consumption. SHFE zinc prices remained rangebound.

Tin

Overnight, SHFE 2310 tin contract price slumped, hitting a low of 213,150 yuan/mt and then rebounded. The price finally closed at 213,750 yuan/mt, down 0.77%.

Spot premiums and discounts changed little on August 31 morning. Small brand tin ingots were offered at premiums of 0-200 yuan/mt, and premiums of 100-400 yuan/mt for delivery brands, premiums of 800-1,200 yuan/mt for Yunxi brand, and discounts of 400-200 yuan/mt for imported brands. Transactions were thin and worse than the previous day.

Nickel

The most-traded SHFE nickel contract opened at 165,300 yuan/mt at the night session on August 31, and closed at 164,840 yuan/mt, down 960 yuan/mt. Trading volume rose by 44,677 lots, and open interest decreased by 1,857 lots.

From a macro perspective, the US announced the August USADP employment data as 177,000, less than the predicted value of 195,000 and far lower than the previous value of 371,000, indicating that current US market performance declined and labor market performance was poor. It may affect the process of the Fed to raise interest rates in September. In the fundamentals, spot market transactions were depressed and downstream demand was muted. So, nickel prices are expected to fluctuate in the future.