SMM Morning Comment For SHFE Base Metals On August 23

SHANGHAI, August 23 (SMM) –

Coppera

US Dollar Index Rose, Copper Prices Fell Overnight [SMM Copper Morning Comment]

LME copper opened at $9,212.5/mt overnight, initially reaching a high of $9,212.5/mt before fluctuating downward. It touched a low of $9,120/mt near the end of the session and finally closed at $9,120/mt, down 1.39%. Trading volume reached 15,000 lots, and open interest was 278,000 lots. The most-traded SHFE copper 2410 contract opened at 73,680 yuan/mt, initially reaching a high of 73,820 yuan/mt before fluctuating downward. It touched a low of 73,360 yuan/mt near the end of the session and finally closed at 73,520 yuan/mt, down 0.64%. Trading volume reached 44,000 lots, and open interest was 152,000 lots. Macro side, the latest US economic data was mixed, and the US dollar index rose, which was bearish for copper prices. The market needs more guidance, focusing on Fed Chairman Powell's speech on the economic outlook at the Jackson Hole Economic Symposium. Fundamentally, due to the continuous release of warrants, spot premiums/discounts declined. Downstream purchasing sentiment was decent yesterday, but some companies remained on the sidelines due to high copper prices. According to SMM, as of Thursday, August 22, copper stocks in major regions across China decreased by 5,400 mt from Monday to 283,500 mt, marking the seventh consecutive week of weekly destocking. Total inventory was 209,300 mt higher YoY compared to 74,200 mt last year. Price-wise, the downside for copper prices is expected to be limited.

Aluminum

S&P US August Manufacturing PMI Hits Recent Low; Domestic Aluminum Inventory Destocking Slows [SMM Aluminum Morning Comment]

SMM, Aug 23: Overnight, the most-traded SHFE aluminum 2410 contract opened at 19,840 yuan/mt, hit a high of 19,880 yuan/mt, a low of 19,745 yuan/mt, and closed at 19,825 yuan/mt, down 45 yuan/mt or 0.22%. Overnight, LME 3M aluminum opened at $2,482/mt, hit a high of $2,531/mt, a low of $2,466/mt, and closed at $2,466.5/mt, down $14.5/mt or 0.58%.

Macro side, the S&P Global's US Manufacturing PMI index was lower-than-expected, while weekly jobless claims slightly exceeded expectations, providing data support for the US Fed's upcoming monetary policy decisions. Several Fed officials have indicated that a rate cut is imminent, making it a likely event. On the fundamentals, domestic aluminum ingot inventory continues to decline, but the destocking speed has slowed due to the aluminum price rebound, leading to increased market caution. Meanwhile, domestic aluminum supply remains stable, with only sporadic resumption of production expected in the future. Additionally, downstream consumption is expected to improve, boosted by car trade-in programs and real estate policies. Recently, external macro sentiment has been relatively positive, and the supply-demand mismatch has somewhat eased. SMM expects short-term aluminum prices to have upside potential, with continued attention needed on macro sentiment changes and the sustainability of downstream aluminum consumption.

Lead

Overnight, LME lead opened at $2,080.5/mt. During the Asian session, it rose slightly, and in the European session, it reached a high of $2,096.5/mt before falling to a low of $2,046/mt, then slightly rebounded and finally closed at $2,056.5/mt, down $33.5/mt, a decrease of 1.6%.

Overnight, the most-traded SHFE lead 2409 contract opened at 17,425 yuan/mt. After consolidating around the intraday moving average in the early session, it weakened to a low of 17,310 yuan/mt, slightly rebounded, and finally closed at 17,350 yuan/mt, down 185 yuan/mt, a decrease of 1.06%.

Zinc

Joint Production Cuts Continue to Boost Bullish Sentiment, SHFE Zinc Moves Higher [SMM Morning Comment]

SMM, Aug 23: US Fed officials made intensive statements; the latest US economic data was mixed; Blinken proposed Egypt's participation in the Philadelphia Corridor peacekeeping force; new rules for offline IPOs will be implemented starting October 1; the current domestic retail price cap for refined oil products will not be adjusted; regulatory authorities further standardized internet insurance business.

Overnight, LME zinc opened at $2,852.5/mt, briefly fell to $2,840/mt after the opening, then rebounded to run near the daily moving average. During the midday session, LME zinc rose to a high of $2,882/mt, then fell back from highs, and near the close, the focus rose again to near the daily moving average, finally closing up at $2,857.5/mt, up $1.5/mt, an increase of 0.05%. Trading volume increased to 11,203 lots, and open interest increased by 759 lots to 211,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the 5-day moving average providing support. LME zinc inventory decreased by 775 mt to 256,850 mt, a decline of 0.3%. S&P Global flash US August Manufacturing PMI recorded an eight-month low, indicating poor manufacturing data. Additionally, last week's initial jobless claims data was revised upward, indicating a cooling labour market, and the market's rate cut expectations continued. LME zinc maintained high levels.

Overnight, the most-traded SHFE zinc 2410 contract opened at 23,740 yuan/mt, rose after the opening, then fell back from highs to fluctuate below the daily moving average, hitting a low of 23,645 yuan/mt. Near the close, SHFE zinc surged again, reaching a night session high of 23,835 yuan/mt, finally closing up at 23,825 yuan/mt, up 155 yuan/mt, an increase of 0.65%. Trading volume decreased to 101,000 lots, and open interest increased by 7,806 lots to 120,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the upper Bollinger Bands forming resistance. SMM reported on Thursday that zinc ingot social inventory continued to decrease, coupled with news of joint production cuts by smelters, which continued to boost market bullish sentiment, driving SHFE zinc to continue rising.

Tin

SHFE tin prices narrowly fluctuated during the night session. Yesterday, LME tin inventory increased by 240 mt [SMM Tin Morning Comment].

SMM, August 23: During the night session yesterday, the most-traded SHFE tin futures contract closed at 265,540 yuan/mt, down by 660 yuan/mt, a decrease of 0.25%. The highest price was 266,980 yuan/mt, and the lowest was 264,400 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 ingot quotes were at par to a premium of 500 yuan/mt over the SHFE 2409 contract. Delivery brand prices were at a premium of 500-1,000 yuan/mt over the SHFE 2409 contract, Yunnan Tin brand quotes were at a premium of 1,000-1,100 yuan/mt over the SHFE 2409 contract, and imported tin brand spot quotes were at par with the SHFE 2409 contract. Yesterday, tin prices fluctuated upwards, with some downstream companies planning to restock at lower prices, while a few companies restocked as needed. Most trading companies had scattered transactions, with a few trading companies transacting 10-20 mt. Overall, the spot market transactions were relatively quiet yesterday.

Nickel

On August 22, Jinchuan nickel was quoted at a premium of 1,000-1,200 yuan/mt, with an average of 1,100 yuan/mt, remaining unchanged from the previous trading day. Norilsk nickel was quoted at a discount of 400 yuan/mt to a premium of 100 yuan/mt, with an average discount of 150 yuan/mt, up 100 yuan/mt from the previous trading day. In the morning, the market fluctuated downward but remained within the phase range. The spot market premium showed little overall fluctuation compared to the previous working day. Nickel briquette prices were 127,600-128,000 yuan/mt, down 1,000 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 1,095 yuan/mt (nickel sulphate prices were 1,095 yuan/mt lower than nickel briquette prices).