SMM Morning Comment For SHFE Base Metals August 9

SHANGHAI, Aug 9 (SMM) –

Copper

LME copper prices closed at $8,378/mt overnight, down 1.39%. Trading volumes were 33,000 lots and open interest stood at 285,000 lots. The most active SHFE 2309 copper contract finished at 68,190 yuan/mt overnight, down 1.03%. Trading volume was 617.29,000 lots, and open interest stood at 172,000 lots. On the macro front, the market is nervous about the outlook for global economic growth, which may be much weaker than expected, driving capital inflows into the U.S. dollar, and the U.S. dollar index rose. In addition, Philadelphia Fed Chairman believes that the U.S. economy is on a steady decline track, and the Fed may have reached a stage where it can keep interest rates stable, and it is more likely that the economy will achieve a soft landing. In terms of fundamentals, affected by the source of imported goods, the spot goods in east China are relatively abundant, and the spot quotes continued to decline yesterday. It is expected that there will be continuous inflow of imported copper in the near term, and the delivery is approaching. Spot quotes are expected to continue to be under pressure; the inventory in south China fell yesterday, mainly due to the lack of arrivals. Spot quotes in South China also continued to decline. In terms of consumption, demand is expected to be weak in the near future. Copper prices are expected to be under pressure.

Aluminum

Overnight, the most-traded SHFE 2309 aluminium contract opened at 18,385 yuan/mt, with the lowest and highest prices at 18,345 yuan/mt and 18,410 yuan/mt before closing at 18,380 yuan/mt, down 110 yuan/mt or 0.59% from the previous trading day. LME aluminium opened at $2,230/mt on Tuesday, with its high and low at $2,233/mt and $2,198/mt respectively before closing at $2,198/mt, a decrease of $32/mt or 1.4% from the previous trading day.

On the macro front, the Fed is expected to raise interest rates again. The US dollar index rebounded, making the overall performance of non-ferrous metals under pressure. China is focusing on expanding the domestic demand and economic stimulus policies continue to be implemented. In terms of fundamentals, aluminum production in Yunnan is speeding up, and pressure on the supply side gradually emerges. Due to floods and other factors in the north during the week, fewer aluminum ingots arrived. The social inventory of aluminum ingots is in a state of destocking, and orders in some downstream sectors increased, but consumption in mainstream markets isstill relatively weak. In the short term, the accumulation of aluminum social inventory is lower than expected, and the low-inventory status is difficult to change in the short term, giving support to aluminum prices. With the release of positive sentiment at the macro level plus the current increase in supply and the poor fundamentals of downstream consumption, SMM predicted that the short-term aluminum prices will remain volatile, and follow-up attention should be paid to consumption and inventory.

Lead

Overnight, LME lead prices closed at $2,121.5/mt, down 0.54%.

The most active SHFE 2309 lead contract prices finally closed at 15,910 yuan/mt, down 0.41%, with the open interest up 182 lots to 101,000 lots.

Zinc

LME zinc prices closed down $21/mt or 0.84% at $2,470/mt last Friday evening. The trading volume increased to 7,596 lots, and open interest fell 50 lots to 202,000 lots. LME zinc inventory shed by 1,650 mt to 90,000 mt. The market is expected to strengthen the soft landing, and the rapid rise of the US dollar overnight has suppressed the price of zinc.

The most active SHFE 2309 zinc contract prices closed at 20,705 yuan/mt overnight, down 195 yuan/mt or 0.93%. The trading volume was down to 87,530 lots, and open interest fell 4,163 lots to 95,696 lots. The trade surplus narrowed, and the total import and export volume fell by 13.6% month-on-month. Automobile production and sales data showed a significant decline month-on-month. Zinc prices will lack ability to rise.

Tin

Overnight, SHFE 2309 tin contract price declined sharply after the opening and then gradually recovered. After reaching a high price of around 226,000 yuan/mt, it fell again and finally closed at 224,910 yuan/mt, down 1.45%.

Nickel

SHFE 2309 nickel contract opened at 167,000 yuan/mt at the night session on August 8, and closed at 165,940 yuan/mt, down 140 yuan/mt. Trading volume fell by 44,261 lots, and open interest decreased by 10,173 lots.

Affected by the fading positive macroeconomic sentiment, SHFE nickel prices fluctuated downward yesterday. From a fundamental point of view, the downstream market continued to consume inventory previously due to the impact of the high nickel price and didn’t make large purchases. But the current decline in nickel prices encouraged the downstream demand to pick up yesterday, and the overall spot market transaction atmosphere warmed up. In summary, it is expected that the subsequent nickel price may fluctuate.