SMM Morning Comment For SHFE Base Metals On July 3

SHANGHAI, July 3 (SMM) –

Copper

Overnight, LME copper opened at $9,708.5/mt, peaking at $9,749.5/mt, then declining to a session low of $9,654/mt, and finally closed at $9,660.5/mt, up 0.25%. Trading volume reached 15,000 lots, and open interest reached 325,000 lots. Overnight, the most-traded SHFE 2408 copper contract opened at 79,140 yuan/mt, surging to a session high of 79,380 yuan/mt, then hitting a session low of 78,770 yuan/mt, and finally closed at 78,770 yuan/mt, up 0.06%. Trading volume reached 49,000 lots, and open interest reached 197,000 lots. On the macro front, Fed Chairman Powell reiterated significant progress in reducing inflation, expecting the inflation rate to be around the mid-to-low level of 2% in a year, but refused to comment on the issue of a rate cut in September. The US dollar index was relatively weak, and copper prices closed higher. Fundamentally, imported copper continued to arrive, while sellers converted previous sources into warrants. Premiums rose, but trading was moderate, with relatively active trading in non-registered imported sources. Overall, copper prices are expected to fluctuate upward today.

Aluminum

Market: Overnight, the most-traded SHFE aluminum contract 2408 opened at 20,440 yuan/mt, reached a high of 20,460 yuan/mt, a low of 20,370 yuan/mt, and closed at 20,375 yuan/mt, down 20 yuan/mt from the previous day, a decrease of 0.1%. LME aluminum opened at $2,517.5/mt in the previous trading day, hit a high of $2,537/mt, a low of $2,513/mt, and closed at $2,516/mt, down $1.5/mt from the previous day, a decrease of 0.06%.

Summary: Macro side, the dollar edged lower overnight as Fed Chairman Powell's speech was moderately dovish, suggesting that the Fed is more likely to launch an easing cycle later this year. The focus then shifts to the non-farm payrolls data to be released on Friday. Fundamentals, domestic aluminum supply maintained growth; the off-season dragged down the operating rate of downstream aluminum producers. In July, domestic aluminum ingot destocking has not proceeded smoothly, and inventory levels remain high for the same period. Spot discounts persist. In the short term, aluminum prices are expected to move rangebound. We need to continue to monitor the Fed's rate cut process, domestic consumption performance, and inventory changes.

Lead

Overnight, LME lead opened at $2,219/mt. During the day, driven by the strong performance of SHFE lead, LME lead swung on a soft note, touching $2,238.5/mt at the top, refreshing a one-and-a-half-week high. However, with inventory accumulation in LME lead, together with a reversal and decline in SHFE lead, LME lead also plummeted, once falling below the $2,200/mt mark, and finally closed at $2,201.5/mt, down 0.56%.

Overnight, the most-traded SHFE lead 2408 contract opened at 19,740 yuan/mt. With a slight increase in domestic lead inventory and the expectation of imported lead arrivals, SHFE lead reversed its daytime strength and gradually fluctuated downward, hitting a low of 19,525 yuan/mt during the session. Meanwhile, the reduction in domestic ingot production continued. In the latter part of the trading session, SHFE lead consolidated around 19,575 yuan/mt due to positive and negative factors, finally closing at 19,570 yuan/mt, down 0.48%. Its open interest reached 103,000 lots, a decrease of 3,945 lots from the previous trading day.

Zinc

Overnight, LME zinc opened at $2,924.5/mt, reaching a high of $2,952.5/mt, then falling to a low of $2,916/mt amid an unexpected rebound in US job openings data, and finally closed at $2,919/mt, down $2/mt, a decrease of 0.02%. Trading volume was reduced to 7,398 lots, and open interest increased by 635 lots to 238,000 lots. Overnight, LME zinc recorded a bearish candlestick, with LME inventory reduced by 2,075 mt to 259,775 mt, a decrease of 0.79%. The macro sentiment was bearish, with US job openings unexpectedly rebounding from a more than three-year low, putting pressure on LME zinc. It is expected that LME zinc will run weak today.

Overnight, the most-traded SHFE 2408 zinc contract opened at 24,530 yuan/mt, rising to a high of 24,625 yuan/mt, then reaching a low of 24,420 yuan/mt, and finally closed at 24,470 yuan/mt, up 20 yuan/mt, an increase of 0.08%. Trading volume dropped to 74,717 lots, and open interest decreased by 76 lots to 93,271 lots. Overnight, SHFE zinc recorded a bearish candlestick. The domestic supply and demand remain weak in the short term. With US job openings rebounding from a low overnight, SHFE zinc is expected to fluctuate today.

Tin

The most-traded SHFE tin contract closed at 272,400 yuan/mt, down 2,020 yuan/mt or 0.74%, with the highest at 276,000 yuan/mt and the lowest at 272,350 yuan/mt.

Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as below. Small brand tin ingots were offered at discounts of 500 yuan/mt over SHFE 2408 tin contract, versus discounts of 0-500 yuan/mt for delivery brands, premiums of 200-400 yuan/mt for Yunxi brand. Tin prices continued to rise yesterday, leaving downstream companies on the sidelines. Yesterday, SHFE tin warrants increased by 95 mt to 14,915 mt, while LME tin stocks decreased by 25 mt to 4,725 mt.

Nickel

On July 2, Jinchuan nickel was at a premium of 1,400-1,500 yuan/mt, with an average of 1,450 yuan/mt, down 100 yuan/mt from the previous trading day. Russian nickel was at a discount of 0-300 yuan/mt, with an average of 150 yuan/mt, down 50 yuan/mt from the previous trading day. In the morning, as the market fluctuated slightly upwards, downstream purchasing willingness decreased. However, the shortage of electro-deposited nickel in the spot market continued, and the premiums and discounts of various brands remained firm. The price of nickel briquette was 135,300-135,500 yuan/mt, up 650 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 5,854 yuan/mt (nickel sulphate prices were 5,854 yuan/mt lower than nickel briquette prices).