SMM Morning Comments

Category:-Metal | 13-Sep-2023 09:09 AM


LME copper prices opened at $8395.5/mt and closed at $8392.5/mt in overnight trading, a drop of 0.11%, with the low-end of $8351/mt and the high-end of $8400/mt. Trading volume was 10,000 lots, and open interest stood at 282,000 lots. The most active SHFE 2310 copper contract prices opened at 69250 yuan/mt and closed at 69180 yuan/mt last evening, down 0.22%, with the high-end of 69260 yuan/mt and the low-end of 69010 yuan/mt. Trading volumes stood at 20,000 lots and open interest stood at 151,000 lots. On the macro front, the U.S. NFIB small business confidence index recorded 91.3 in August, lower than the expected 91.5 and the previous value of 91.9. In addition, the European Central Bank's new forecast for inflation in 2024 exceeds 3%, compared with the 3% forecast in June, providing a solid case for raising interest rates. In terms of fundamentals, high copper prices kept downstream purchases cautious. Yesterday's spot quotes in east China continued to fall, and overall transactions were inactive; inventories in south China fell for the fifth consecutive day, mainly due to the limited arrivals of goods. Therefore, although low inventory supported sellers to increase shipments at a higher price, market transactions were still quiet. In terms of consumption, with the backwardation structure as delivery approaches, downstream maintained on-demand purchases, and demand is expected to improve after the delivery. Copper prices are expected to remain rangebound as the market is awaiting the US inflation data.


Overnight, the most-traded SHFE 2310 aluminum contract opened at 19,300 yuan/mt, with its lowest and highest at 19,210 yuan/mt and 19,300 yuan/mt before closing at 19,255 yuan/mt, up 10 yuan/mt or 0.05%. LME aluminum opened at $2,204.5/mt on Tuesday, with its high and low at $2213.5/mt and $2186.5/mt respectively before closing at $2196/mt, a drop of $8/mt or 0.36%.

There are no major macro events recently. In the near future, we need to pay close attention to the multiple impacts Europe of interest rate hike expectations and exchange rate fluctuations on the non-ferrous metals market. Aluminum supply increased, with domestic social inventory of aluminum ingots rising above the 500,000 mt mark, and the inventory pressure in September may mount. At the same time, the supply of imported goods in the market has increased recently, and we need to be alert to the impact of imported low-priced supplies on the domestic aluminum spot market. Low inventory will support aluminum price, while supply pressure will cap gains. It remains uncertain how strong demand will be in September, which normally marks the beginning of peak season. SMM expects short-term aluminum prices to remain volatile and strong, and will pay attention to domestic aluminum inventories and downstream consumption in the future.


LME lead prices opened at $2249/mt and closed at $2222.5/mt in overnight trading, down 1.22%, with the high-end of $2249.5/mt and the low-end of $2207/mt.

The most active SHFE 2310 lead contract prices opened at 16920 yuan/mt last evening, and closed at 16855 yuan/mt, a drop of 1.32%, with the high-end of 16985 yuan/mt and the low-end of 16800 yuan/mt.


Overnight, LME zinc prices opened at $2510.5/mt and went down to close at $2482/mt, down $92.5/mt or 1%. Trading volume dropped to 7424 lots, and open interest added 3169 lots to 200,000 lots. LME zinc inventories decreased by 3375 mt to 138400 mt, a drop of 2.38%. The continued decline in inventories and the expected reduction in overseas zinc concentrate production are expected to limit the decline in zinc prices.

The most active SHFE 2310 zinc contract prices opened at 21710 yuan/mt and lost 55 yuan/mt or 0.25% to settle at 21665 yuan/mt in overnight trading with the high-end of 21755 yuan/mt and the low-end of 21585 yuan/mt. Trading volumes decreased to 53520 lots and open interest fell 489 lots to 112,000 lots. Zinc prices are expected to run at a high level.


SHFE 2310 tin contract moved sideways last night, and closed at 215,750 yuan/mt, down 0.88%.

Spot premiums and discounts barely changed yesterday. Small brand tin ingots were offered at premiums of 0-300 yuan/mt, and premiums of 200-500 yuan/mt for delivery brands, premiums of 800-1,100 yuan/mt for Yunxi brand, and discounts of 700-800 yuan/mt for imported brand tin ingots slated to arrive in China next week. Overall trades in spot market declined slightly yesterday.


Overnight, the most-traded SHFE nickel contract opened at 166,450 yuan/mt, and closed at 162,170 yuan/mt, down 4,280 yuan/mt. Trading volume rose 45,010 lots, and open interest increased by 3,421 lots. On the macro front, we still need to pay attention to the U.S. August CPI data to be released on Wednesday night. The current market expectation is 3.6%, which is higher than the previous value of 3.2%, reflecting that the market is now expecting the Federal Reserve to raise interest rates. Looking at the spot market, yesterday's nickel prices plunged in the afternoon. With the National Day holiday approaching, some downstream buyers have begun to stock up. Nickel price is expected to be volatile.

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