SHANGHAI, Sep 16 (SMM) – LME and SHFE base metals closed mostly with losses as the US dollar hovered at a high level in light of better US economic readings including retail sales and jobless claims, which heightened the expectation of a 100bps rate hike in September.

LME copper slid 0.95%, aluminium rose 1.83%, lead fell 2.57%, and zinc lost 2.16%.

SHFE copper slid 0.32%, aluminium rose 1.87%, lead fell 0.2%, and zinc lost 0.08%.

Copper: LME copper opened at $7,788/mt yesterday and reached the lowest and the highest point of $7,694.5/mt and $7,785/mt respectively. At last, the contract closed at $7,711.5/mt, down 0.95%. Trading volume was 13,000 lots, and open interest stood at 249,000 lots.

SHFE 2210 copper contract opened at 62,010 yuan/mt in overnight trading and fell after hitting 62,320 yuan/mt. At last, the contract closed at 62,090 yuan/mt, down 0.32%. Trading volume was 41,000 lots, and open interest stood at 152,000 lots.

On the macro front, the monthly rate of US retail sales announced yesterday and the number of US continued jobless claims last week were better than expected, strengthening the expectations that the US Fed would raise interest rates by 75 or even 100 basis points. The US dollar remained high, and copper futures were under pressure. In addition, the US railroad strike reached a preliminary agreement, and the International Monetary Fund spokesman said that some countries will fall into recession in 2023. Both US oil and Brent Crude fell by more than 3%, which was bearish for copper prices.

The fundamentals stayed unchanged. The current low inventory still supports copper prices. Besides, the macro aspect will further affect the trend of copper prices. At present, the market focus is still on the US Fed’s interest rate hikes to be announced in the early morning of September 22, and copper prices are expected to be volatile with some downward potential in the near future.

Aluminium: The most-traded SHFE 2210 aluminium contract opened at 18,880 yuan/mt overnight before closing at 19,045 yuan/mt, up 350 yuan/mt or 1.87%.

LME aluminium opened at $2,276/mt on Thursday and closed at $2,315/mt, up 1.83%.

Although the downstream demand has not seen a significant recovery, it is expected that the short-term SHFE aluminium prices will still have upside room due to domestic and overseas supply disruptions and digestion of bearish macro factors.

Lead: LME lead opened at $1,958.5/mt and declined by 2.57% to $1,914/mt after hitting the highest point at $1,966/mt and the lowest point at $1,9115/mt. The open interest decreased by 237 lots to 92,044 lots from the previous trading day.

The mos traded SHFE 2210 lead contract opened at 15,025 yuan/mt and fell 0.2% to end at 15,010 yuan/m, after briefly hitting the lowest point at 14,985 yuan/mt and rising to the highest level at 15,055 yuan/mt. The open interest increased by 464 lots to 41,626 lots from the previous trading day.

Zinc: LME zinc closed at $3,172/mt on Thursday, down $70/mt or 2.16%. The open interest fell 3,906 lots 194,000 lots. Overnight LME inventory fell 275 mt to 76,100 mt.

The most traded SHFE 2210 zinc contract closed at 24,655 yuan/mt overnight, down 20 yuan/mt or 0.08%. The open interest fell 1,690 lots to 114,000 lots. On the supply side, zinc ingot output is estimated at 525,700 mt in September, but the production situation in Yunnan is worth attention with local power supply getting tight. On the consumption side, the galvanizing operating rates averaged 61.78% in August, up 0.59 percentage point MoM. But the die-casting sector fell short, and the monthly average operating rate fell 2.11 percentage points to 40.72%. The downstream has not yet recovered. In the spot market, zinc ingot transferred from Guangdong to Shanghai has eased the supply tightness under long-term orders. The spot premiums in Shanghai fell as much as 100 yuan/mt to 600 yuan/mt with sluggish transactions.

Overnight, Xi Jinping met with Russian President Vladimir Putin. After more than 2 years, the offshore RMB exchange rate fell again, but the non-US currency is still strong; analysts said the RMB will definitely regain the losses. Chinese Ministry of Industry: there are indeed blind investment and duplication of construction concerning new energy vehicles in some provinces and cities, but will gradually be addressed.

Tin: The most-traded SHFE tin contract rallied after opening lower overnight, but still moved within a narrow range. Open interest dropped slightly. Domestic tin inventory on warrants rose slightly due to delivery of the front-month contract. LME tin inventory continued to accumulate. Overseas premiums remained low. The import profit window remains open. As the short-term market supply-demand imbalance is not very prominent and the willingness of investors to enter the market is weak, it is expected that SHFE tin will continue to move sideways at a low level.

Nickel: On the supply side, the SHFE/LME price ratio narrowed this week and the prices of pure nickel in the bonded zone were high, so the imports were at a loss. It is expected that the arrival of imported pure nickel this week will be less than expected. In terms of NPI, affected by the recovery of the stainless steel market, NPI plants were active in shipping. On the demand side, according to SMM research, spot prices of stainless steel in the Wuxi and Foshan markets were stable but weak, thus the market inquiries became active. But the transactions were mostly the traders' trading, and the downstream mainly purchased on rigid demand, while the terminal enterprises were not willing to restock. In terms of alloys, the producers were less willing to restock amid the high spot pure nickel prices. To sum up, the demand for pure nickel remains poor, which will offer weak support to the nickel prices.

[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.]

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