SMM Morning Comment For SHFE Base Metals On August 21

SHANGHAI, August 21 (SMM) –

Copper

Market Concerns Resurfaced, Copper Prices Fell Overnight [SMM Copper Morning Comment]

LME copper opened at $9,262.5/mt overnight, initially reaching a high of $9,286.5/mt. It then fluctuated downward, hitting a low of $9,170/mt by the end of the session and finally closing at $9,181.5/mt, down 0.85%. Trading volume reached 18,000 lots, and open interest was 282,000 lots. The most-traded SHFE copper 2409 contract opened at 74,050 yuan/mt, initially reaching a high of 74,120 yuan/mt before fluctuating downward. It quickly fell to a low of 73,350 yuan/mt by the end of the session and finally closed at 73,510 yuan/mt, down 0.57%. Trading volume reached 25,000 lots, and open interest was 133,000 lots. Macro side, hopes for a ceasefire in Gaza triggered a sell-off in the oil market, which also dragged down copper prices. Additionally, the International Copper Study Group reported that the copper cathode market had a surplus of 488,000 mt in the first six months of this year, exacerbating market concerns. Fundamentally, the spot market saw an increase in warrants, boosting supply. With rising copper prices, downstream buyers showed some hesitation, putting pressure on spot premiums/discounts. Price-wise, copper prices are expected to face some resistance.

Aluminum

Due to power shortages, overseas aluminium supply decreased, and the EU imposes anti-subsidy duties on Chinese NEVs [SMM Aluminum Morning Comment].

SMM, Aug 21: Overnight, the most-traded SHFE aluminum 2410 contract opened at 19,840 yuan/mt, reaching a high of 19,855 yuan/mt and a low of 19,665 yuan/mt, closing at 19,695 yuan/mt, up 20 yuan/mt or 0.1%. Overnight, LME 3M aluminum opened at $2,430/mt, with a high of $2,506/mt and a low of $2,418/mt, closing at $2,476/mt, up $30.5/mt or 1.25%.

Macro side, overseas investment banks are still trading on rate cut expectations, and the US dollar index continues to weaken. Fundamentals side, due to power shortages in New Zealand, overseas aluminium supply has decreased; domestic aluminium supply remains stable at high level. Downstream, industrial extrusion orders have picked up, leading to a slight increase in the operating rate of leading extrusion companies. Meanwhile, in the traditional peak season and under domestic economic stimulus policies, downstream consumption is expected to improve. Recently, external macro sentiment has been friendly, and the supply-demand mismatch has somewhat eased. SMM expects short-term aluminum prices to show a rebound and fluctuate. Continued attention is needed on aluminum consumption and aluminum social inventory changes.

Lead

Overnight, LME lead shorts reduced their positions, resulting in LME lead continuing the upward trend, while SHFE lead moved downwards after a higher opening, closing slightly lower [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,029/mt. After consolidating sideways during the Asian session, it edged up slightly. In the European session, shorts reduced their positions and exited, pushing LME lead up to a high of $2,080/mt before it retraced to consolidate near the intraday moving average, finally closing at $2,061/mt, up $23/mt, or 1.15%.

Overnight, the most-traded SHFE lead 2409 contract opened at 17,820 yuan/mt. After briefly touching a high of 17,915 yuan/mt at the beginning of the session, it moved downwards to a low of 17,390 yuan/mt, finally closing at 17,495 yuan/mt, down 55 yuan/mt, or 0.31%.

Zinc

The fundamentals of weak demand remain unchanged, SHFE zinc fluctuates at high levels [SMM Morning Comment]

US Fed Governor Bowman: If inflation continues to decline, it will support a rate cut; Goldman Sachs: US non-farm employment figures may be revised down by up to 1 million over the past year; Swedish central bank cuts rates by 25 basis points again; Biden says Hamas is abandoning the agreement; the new loan prime rate remains unchanged; eight departments: promote the replacement of batteries in old urban new energy buses.

Overnight, LME zinc opened at $2,797/mt, and after the opening, LME zinc moved down along the daily average line to a low of $2,763/mt. It then rebounded from the low and fluctuated upwards, reaching a high of $2,834/mt before falling again below the daily average line. At the end of the session, LME zinc fluctuated at a low level and finally closed up at $2,794.5/mt, an increase of $4/mt or 0.14%. Trading volume increased to 10,097 lots, and open interest decreased by 1,881 lots to 215,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 40-day moving average forming resistance above. LME inventory decreased by 1,200 mt to 258,800 mt, a decrease of 0.46%. Market expectations for a US Fed rate cut in September increased, the US dollar index weakened, and LME zinc rebounded during the session, with the overall focus remaining stable.

Overnight, the most-traded SHFE zinc 2410 contract opened at 23,445 yuan/mt. SHFE zinc initially reached a high of 23,495 yuan/mt, then fluctuated downwards after the opening. Near the end of the session, SHFE zinc hit a low of 23,210 yuan/mt and finally closed up at 23,280 yuan/mt, an increase of 10 yuan/mt or 0.04%. Trading volume increased to 77,648 lots, and open interest increased by 2,635 lots to 99,262 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 5-day moving average providing support below. Influenced by the overseas futures market, SHFE zinc opened higher. However, the weak domestic demand trend remained unchanged, continuously dragging down zinc prices, with SHFE zinc slightly rising.

Tin

SHFE tin prices moved downwards after a higher opening in the night session. SHFE tin warrants decreased by 324 mt yesterday [SMM Tin Morning News].

SMM, August 21: In the night session yesterday, the most-traded SHFE tin futures contract closed at 263,100 yuan/mt, down by 1,300 yuan/mt, a decrease of 0.49%. The highest price was 266,650 yuan/mt, and the lowest was 261,330 yuan/mt. During the morning session yesterday, trading companies' quotes for various domestic tin ingot brands showed little change compared to recent days. Small brand tin ingots were quoted at a premium of 0 to 500 yuan/mt over the SHFE 2409 contract. Delivery brands were quoted at a premium of 500 to 1,000 yuan/mt over the SHFE 2409 contract, Yunnan Tin brand was quoted at a premium of 1,000 to 1,200 yuan/mt over the SHFE 2409 contract, and imported tin brands were quoted at par with the SHFE 2409 contract. Yesterday, tin prices rebounded after hitting a low, but downstream companies' purchasing enthusiasm remained low. A few companies restocked as needed, and some downstream companies aimed to restock at lower prices. Most trading companies had scattered transactions, with a few trading companies transacting 20 to 30 mt. Overall, the spot market transactions were mediocre yesterday.

Nickel

SMM Nickel Market Morning Comment (Aug 21)

On August 20, Jinchuan nickel was quoted at a premium of 1,100-1,300 yuan/mt, with an average of 1,200 yuan/mt, down 150 yuan/mt compared to the previous trading day. Norilsk nickel was quoted at a discount of 400-0 yuan/mt, with an average of 200 yuan/mt, down 50 yuan/mt compared to the previous trading day. In the morning, the market fluctuated slightly stronger, but prices remained within the phased range. The spot market premium showed little overall fluctuation compared to the previous working day. Nickel briquette prices were 127,600-127,850 yuan/mt, an increase of 75 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 1,361 yuan/mt (nickel sulphate prices were 1,361 yuan/mt lower than nickel briquette prices).