LME base metals closed mostly with losses as August ADP employment figure was less than expected, increasing by only 132,000, deterring the market from continuing to bet on the long dollar before the release of the non-farm payrolls data on Friday. And the hawkish voices from US Fed officials also weighed on the market sentiment.
Copper: LME copper opened at $7,572.5/mt yesterday and fell to $7,510/mt before rebounding to $7,562/mt. At last, the contract closed at $7,552.0/mt, down 0.81%. Trading volume was 14,669 lots
On the macro front, the US “small non-farm payrolls” data released yesterday – the August ADP employment figure was less than expected, increasing by only 132,000, deterring the market from continuing to bet on the long dollar before the release of the non-farm payrolls data on Friday, with the dollar index retreating from its highs overnight. For crude oil, news that both OPEC and US crude oil production reached their highest levels before the covid-19 pandemic first broke out, while the market fears that the global economy will slow down further and international crude oil extended its decline overnight. Recent hawkish speeches by multiple officials at the Federal Reserve have extended market concerns about its aggressive rate hikes, with US stocks closing lower for the fourth consecutive day on Wednesday and recording the weakest August performance in seven years. Copper prices were pressured with cautiousness on the macro front.
The fundamentals changed little today, and low inventory still underpinned copper prices. And the supply is likely to pick up with the inflow of imported copper and less disruption from power rationing. Copper will gain less support from the fundamentals.
LME aluminium opened at $2,310.5/mt on Friday and closed at $2,305/mt, down $5.5/mt .
On the supply side, as the temperature in Sichuan has dropped and rainfall has increased recently, the power shortage in the province has eased, and local aluminium production has begun to resume. But the resumption of production was mainly seen in Guangyuan area. The overseas energy crisis continues to escalate, thus overseas aluminium smelters still face the risk of production reduction. On the demand side, the operating rates of domestic aluminium downstream processing enterprises remain low, but those in Jiangsu and Zhejiang may pick up after the power rationing policy is loosened. Given the weak supply and demand situation, energy crisis and macro factors, aluminium prices may continue to move in a wide range.
Lead: LME 3M lead contract opened at $1,906/mt. After Europe published the CPI data in August, LME lead continued to fall amid the expectation of high interest rate hike. LME lead prices rebounded slightly after hitting the lowest point at $1,882/mt and finally closed at $1,886.5/mt.
Zinc: LME zinc closed at $3,137/mt on Friday, Trading volume was 4461 lots. Overnight LME inventory fall 25 mt to 77,500 mt, . LME zinc was pressured by hawkish voices from the US Fed officials, and the less-than-expected US ADP employment also weighed on the market sentiment.
On the supply side, August refined zinc output is estimated at 477,500 mt amid influences like power rationing and maintenance, lower than the original target set at the beginning of the month. The output is likely to rebound to 530,000 mt with the recovery of power and ore supply. On the consumption side, the pandemic resurged in some places in China, which is worth attention though it has not impacted the production yet.
Tin: LME tin inventory rose again by 115 mt to 4610 mt. Trades in the spot market declined as fewer cargoes were available. Overseas premiums remained low. The import window was slightly open. Imported tin was offered at small discounts.
Nickel: On the supply side, the pure nickel spot premiums showed great divergence. Premiums of Jinchuan nickel rallied amid support of downstream demand, while NORNICKEL nickel dropped due to weak demand. For NPI, the situation of oversupply kept containing NPI prices amid high inventory and constantly inflow of Indonesia NPI. On the demand side, the spot prices of stainless steel in Wuxi and Foshan were stable, and are likely to remain rangebound with some downward potentials in the near term. For alloy, the military sector outperformed the civil sector. To sum up, nickel prices will remain at the current level with some potential drops with downstream demand picking up slightly.