SMM Morning Comment For SHFE Base Metals On July 15

SHANGHAI, July 15 (SMM) –
Copper
Last Friday, LME copper opened at $9,802.5/mt, hit a session low of $9,786/mt at the beginning, then climbed all the way up, reaching a session high of $9,881.5/mt at the end of the trading session, and finally closed at $9,877/mt, up by 1.02%. Trading volume reached 20,000 lots, and open interest reached 327,000 lots.
Last Friday night, the most-traded SHFE copper 2408 contract opened at 79,600 yuan/mt, initially dipped to a session low of 79,260 yuan/mt, then rebounded, reaching a session high of 79,770 yuan/mt at the end of the trading session, and finally closed at 79,700 yuan/mt, up by 0.62%. Trading volume reached 40,000 lots, and open interest reached 191,000 lots.

Macro-wise, US inflation data for June unexpectedly declined, and the yen rose, with sources indicating that Japanese officials intervened in the forex market. The weak performance of the US dollar index led to higher copper prices.

Fundamentals, the arrival of imported copper cathode was limited, and copper scrap supply remained tight. On the consumption side, reduced copper scrap supply together with a slight decline in copper prices led to a market rebound in transactions, but overall, demand remained driven by necessity, with some producers waiting for delivery.

In summary, copper prices are expected to remain high. Additionally, it is noteworthy that there was an attempted assassination of Trump, which may continue to impact the US economy and the future direction of the election. Today, attention will be on China's GDP data.
Aluminum
On last Friday night, the most-traded SHFE aluminum 2408 contract opened at 20,055 yuan/mt, reaching a high of 20,095 yuan/mt and a low of 19,925 yuan/mt, and closed at 20,085 yuan/mt, up 15 yuan/mt, an increase of 0.07%. The previous trading day, LME aluminum opened at $2,481/mt, reached a high of $2,489.5/mt, a low of $2,465/mt, and closed at $2,489.5/mt, up $13/mt, an increase of 0.52%.
Summary: On the macro front, although market expectations for a US Fed rate cut are increasing and the upcoming 20th Third Plenary Session in China may bring new positive news, the sudden attack on Trump over the weekend and the complex situation of the Israel-Palestine conflict have added uncertainty to the market. On the fundamentals, domestic aluminum production is increasing, with some capacity still awaiting resumption. Downstream aluminum processing and end-user demand have entered the off-season, with demand in some sectors being hit, leading to a continuous decline in the operating rate of the aluminum processing industry. Social inventory continues to accumulate and is at a high level compared to the same period in the past three years, and spot discounts may persist in the short term. The aluminum market lacks upward driving factors. Due to the impact of the Indonesian ore export event, SMM expects aluminum prices to remain weak in the short term, with attention needed on macro changes affecting aluminum prices.

Lead
Last Friday, LME lead opened at $2,195.5/mt, fluctuated downward during the Asian session, and dipped to $2,173.5/mt in the European session. Later, due to a weaker dollar, LME lead rebounded and closed at a high of $2,214/mt, up by 0.77%.
Last Friday night, the most-traded SHFE lead 2408 contract opened at a low of 19,480 yuan/mt. After the opening, bulls increased their positions, and SHFE lead rose firmly to 19,700 yuan/mt, closing at 19,695 yuan/mt, up by 0.87%.

Zinc
Last Friday, LME zinc opened at $2,954.5/mt, hitting a low of $2,911/mt, moving up to around $2,945/mt by the end of the trading session, and finally closed lower at $2,949/mt, down $2.5/mt, a decrease of 0.08%. Trading volume decreased to 7,702 lots, and open interest decreased by 3,097 lots to 236,000 lots. Last Friday, LME zinc recorded a long lower shadow bearish candlestick, with the middle Bollinger Band providing support below. LME zinc inventory continued to decrease by 2,175 mt to 251,125 mt, a drop of 0.86%. Last Friday, the US CPI and PPI data diverged, leading to a deadlock between bullish and bearish sentiment, with LME zinc maintaining its fluctuations.
Last Friday, the most-traded SHFE 2409 zinc contract opened at 24,165 yuan/mt, quickly dipping to 24,120 yuan/mt, then moving up to around 24,350 yuan/mt, reaching a high of 24,400 yuan/mt by the end of the trading session, and finally closed at 24,395 yuan/mt, up 45 yuan/mt, an increase of 0.18%. Trading volume decreased to 48,949 lots, and open interest decreased by 614 lots to 81,164 lots. Last Friday, SHFE zinc recorded a bullish candlestick, but the daily K-line moved up, with the middle Bollinger Band providing support below. On the domestic fundamentals, zinc concentrate TC was further reduced, indicating continued tight supply. However, the impact of the off-season for consumption persisted, leading to zinc prices maintaining their fluctuations.

Tin
On last Friday night, the most-traded SHFE tin contract closed at 274,830 yuan/mt, down 3,420 yuan/mt, a decrease of 1.23%.
During last Friday's morning session, 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 400-500 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, and discounts of 600 yuan/mt for imported brand tin ingots. Tin prices continued to fall last Friday. Most downstream companies were restocking, and their willingness to purchase rebounded. Overall, the spot market was relatively active last Friday.

Nickel
Last week, SHFE nickel showed a volatile downward trend. It slightly rebounded on Friday due to macro and news factors and finally closed at 135,010 yuan/mt. Nickel prices are still relevant to changes in macroeconomics and fundamentals. At the beginning of the week, nickel prices fluctuated downward due to expectations of a surplus in fundamentals, followed by a slight increase driven by supply-side news. On the macro front, the US June CPI showed an unexpectedly sharp decline in inflation, leading the market to expect that the US Fed might cut interest rates. In terms of news, Australian nickel company BHP announced that it will temporarily shut down the Nickel West and West Musgrave Project nickel mines and related projects in October, which is estimated to impact about 60,000 mt of nickel metal production. Additionally, adverse weather in parts of the Philippines may also affect the departure of cargo ships, with the specific impact yet to be assessed. In the spot market, refined nickel spot consumption was boosted by downstream restocking as nickel prices fluctuated downward earlier, with spot transactions heating up when nickel prices touched around 133,000 yuan/mt. It is worth noting that domestic nickel plates remained scarce in the market, mainly as the price spread between domestic and overseas markets did not narrow. Despite a decline in export profits, some nickel companies and traders still chose to export domestic nickel plates. Overall, there are no significant changes in the current macro and fundamental aspects, and the nickel price range is similar to the previous one.