SMM Morning Comment For SHFE Base Metals On August 9

SHANGHAI, August 9 (SMM) –

Copper

Overnight, LME copper opened at $8,759/mt, briefly rose at the beginning of the session, then fell to a low of $8,732.5/mt. It then fluctuated upwards, reaching a high of $8,823.5/mt near the end of the trading session, and finally closed at $8,809/mt, up 0.67%. Trading volume reached 22,000 lots, and open interest reached 289,000 lots. Overnight, the most-traded SHFE copper 2409 contract opened at 70,700 yuan/mt, touched a low of 70,700 yuan/mt after the opening, then fluctuated upwards. After a brief pullback during the session, it continued to rise, reaching a high of 71,460 yuan/mt near the end of the session, and finally closed at 71,100 yuan/mt, up 0.23%. Trading volume reached 57,000 lots, and open interest reached 171,000 lots.

Macro-wise, the number of initial jobless claims in the US last week fell more than expected, alleviating market concerns about an imminent recession in the US economy and restoring some market confidence. Fundamentals-wise, copper prices saw a significant drop. Together with the implementation of Document No. 783, which shifted some demand from copper rod made from copper scrap to copper cathode rod, consumption remained moderate. Additionally, according to SMM, as of Thursday, August 8, copper stocks in major regions across China tracked by SMM fell by 10,100 mt from Monday to 338,400 mt, marking the fourth consecutive week of weekly destocking.

Price-wise, with market confidence recovering, copper prices are expected to maintain a weak fluctuation.

Aluminum

Market: The most-traded SHFE aluminum 2409 contract opened at 18,900 yuan/mt overnight, reaching a high of 19,080 yuan/mt and a low of 18,900 yuan/mt, and closed at 19,050 yuan/mt, up 105 yuan/mt, or 0.55%. The previous trading day, LME aluminum opened at $2,272/mt, hit a high of $2,285/mt and a low of $2,256/mt, and closed at $2,284/mt, up $11/mt, or 0.48%.

Summary: On the macro level, the Chinese government continues to boost the domestic economy, global liquidity is gradually increasing, and regional conflicts are escalating, providing upward momentum for aluminum prices. On the fundamental side, aluminum production in July was 3.683 million mt, and operating capacity in August is gradually stabilizing with limited subsequent increases, indicating that supply is gradually peaking. In August, downstream aluminum consumption shows signs of stabilizing and recovering, and aluminum ingot inventories are expected to peak gradually. In the short term, both macro and fundamental factors are converging, and aluminum prices may bottom out.

Lead

Overnight, LME lead opened at $1,952/mt and fluctuated downward during the Asian session. After entering the European session, it dipped to $1,941.5/mt, then bears reduced their positions, and LME lead fluctuated upward, finally closing at a high of $1,982/mt, an increase of 1.46%.

Overnight, the most-traded SHFE 2409 lead contract opened at 17,430 yuan/mt, briefly touched a low of 17,325 yuan/mt at the beginning of the session, then rose to 17,905 yuan/mt after bears reduced their positions, and closed at 17,825 yuan/mt, an increase of 2.86%.

Zinc

Overnight, the Bank of Japan turned dovish again! Japan's new top foreign exchange official warned that their stance on forex intervention remains unchanged; participants in the US Fed's reverse repo operations fell to the lowest since June 2021; the White House said a ceasefire agreement in Gaza is close to being reached; Iran stated it is engaging in psychological warfare with Israel and has not taken military action; a poll showed that the competition between US Vice President Harris and former President Trump is very close; the PBOC paused gold purchases for the third consecutive month, with foreign reserves remaining above $3.2 trillion for eight consecutive months; the Ministry of Finance and the Ministry of Emergency Management pre-allocated 465 million yuan again to support provinces severely affected by disasters in emergency rescue and relief efforts; the General Administration of Customs: In the first seven months, China's import and export scale hit a record high for the same period in history; Shenzhen's total service trade import and export in 2023 recorded $130.07 billion, a record high, up 20% YoY.

Overnight, LME zinc opened at $2,602/mt. After initial long-short tussles, LME zinc quickly touched $2,602.5/mt. Subsequently, with increased short positions, LME zinc's focus shifted below the daily moving average, reaching a low of $2,549/mt during European trading hours. Later, with longs entering the market, LME zinc's focus moved back near the daily moving average, recording a V-shaped reversal. During the night session, LME zinc's attempt to test lower levels failed again, and it returned to consolidate around the daily moving average, finally closing down at $2,563/mt, down $49/mt, a drop of 1.88%. Trading volume decreased to 10,982 lots, and open interest increased by 168 lots to 223,000 lots. Overnight, LME zinc recorded five consecutive declines, with the daily K-line focus shifting downward. Overnight, LME inventory decreased by 3,450 mt to 244,375 mt, a drop of 1.39%, with LME inventory recording a reduction. Overnight, a stronger dollar pressured base metals, and concerns about economic recession persisted, leading to weak adjustments in LME zinc.

Overnight, the main SHFE zinc 2409 contract opened higher at 21,900 yuan/mt. After quickly touching 21,990 yuan/mt initially, SHFE zinc fluctuated downward to a low of 21,820 yuan/mt due to long positions entering and short positions closing. Subsequently, with longs entering at lower levels, SHFE zinc's focus moved above the daily moving average. By the end of the session, it dropped slightly, finally closing down at 21,865 yuan/mt, down 140 yuan/mt, a drop of 0.64%. Trading volume decreased to 61,094 lots, and open interest decreased by 350 lots to 82,197 lots. Overnight, SHFE zinc recorded a small bearish candlestick, with the 5-day moving average forming resistance above. Zinc prices fell below the support level of 22,000 yuan/mt, with weak macro sentiment and insufficient momentum for zinc price rebound during the off-season for consumption.

Tin

Last night, the SHFE tin main contract closed at 254,950 yuan/mt, up 9,390 yuan/mt, an increase of 3.82%, with a high of 256,000 yuan/mt and a low of 245,910 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 premiums of 1,000-1,500 yuan/mt over SHFE 2409 tin contract, versus premiums of 800-1,500 yuan/mt for delivery brands, and premiums of 1,000-1,700 yuan/mt for Yunxi brand. Yesterday, tin prices were rangebound, with downstream producers showing a strong wait-and-see sentiment and weak purchasing sentiment. Most traders reported scattered transactions. Overall, the spot market was relatively quiet yesterday, and today's spot market is expected to be even quieter.

Nickel

On August 8, Jinchuan nickel was quoted at a premium of 1,500-1,700 yuan/mt, with an average of 1,600 yuan/mt, an increase of 50 yuan/mt compared to the previous trading day. Norilsk nickel was quoted at a discount of 100 yuan/mt to a premium of 100 yuan/mt, with an average discount/premium of 0 yuan/mt, an increase of 50 yuan/mt compared to the previous trading day. In the morning, the market fluctuated, and the spot market premiums showed little change compared to the previous working day. Nickel briquette prices were 125,500-125,700 yuan/mt, a decrease of 2,150 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 718 yuan/mt (nickel sulphate prices were 718 yuan/mt higher than nickel briquette prices).