SMM Morning Comment For SHFE Base Metals On August 28

SHANGHAI, August 28 (SMM) –

Copper

US Dollar Index Hit New Low, Copper Prices Rose Overnight [SMM Copper Morning Comment]

LME copper opened at $9,348/mt overnight, initially dipped to $9,344.5/mt, and then climbed all the way to a high of $9,453/mt near the close, before dropping slightly to close at $9,419.5/mt, up 1.31%. Trading volume reached 19,000 lots, and open interest was 280,000 lots. The most-traded SHFE copper contract 2410 opened at 75,240 yuan/mt, initially dipped to 75,140 yuan/mt, and then climbed all the way to a high of 75,580 yuan/mt near the close, before dropping slightly to close at 75,410 yuan/mt, up 0.64%. Trading volume reached 39,000 lots, and open interest was 164,000 lots. Macro side, driven by the prospect of an imminent rate cut by the US Fed, the US dollar index hit a new low, falling to its lowest point in over a year, which is bullish for copper prices. On the fundamentals, as the end-of-month long orders from traders have mostly been fulfilled and copper prices remain strong, downstream spot order demand is limited, with restocking mainly driven by rigid demand. Overall market activity is not high. It is expected that end-of-month consumption demand will not significantly improve, and attention should be paid to the subsequent copper price trend. In terms of prices, copper prices are expected to continue to rise.

Aluminum

US Dollar Index Falls to Yearly Low, Overnight Aluminum Futures Rise [SMM Aluminum Morning Meeting Summary]

SMM, Aug 28: Overnight, the most-traded SHFE aluminum 2410 contract opened at 19,950 yuan/mt, reaching a high of 20,035 yuan/mt and a low of 19,915 yuan/mt, closing at 19,995 yuan/mt, up 95 yuan/mt or 0.48% from the previous close. On Tuesday, LME aluminum opened at $2,532/mt, with a high of $2,554/mt and a low of $2,502.5/mt, closing at $2,546.5/mt, up $13/mt or 0.51%.

Summary: On the macro front, driven by the upcoming interest rate cut expectations, the US dollar fell by 3.2% in August. The market is currently awaiting inflation data, which may provide clues for the US Fed's rate cut next month. On the fundamental side, recent power rationing and other disruptions have not had a substantial impact on aluminum production, keeping the supply side relatively stable. Currently, the aluminum market is experiencing a decline in purchasing power and ample circulation of aluminum ingots, which suppresses the narrowing of spot discounts. However, with the traditional peak season and domestic economic stimulus policy, consumption is gradually recovering, and the inventory reduction turning point is expected. In the short term, aluminum prices are expected to remain in a strong fluctuation, with continued attention needed on macro changes and the sustainability of downstream aluminum consumption.

Lead

Longs Increased Positions, SHFE and LME Lead Futures Both Rose [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,113/mt and briefly touched a low of $2,102/mt during the Asian session; boosted by the US Fed's rate cut expectations, longs increased positions, and LME lead rose to a high of $2,126/mt during the European session, closing at a high of $2,126/mt, up 0.76%.

Overnight, the most-traded SHFE lead 2419 contract opened at 17,615 yuan/mt, briefly touched a low of 17,500 yuan/mt at the beginning of the session, and fluctuated upwards to a high of 17,660 yuan/mt due to increased positions by longs, closing at 17,645 yuan/mt, up 0.68%.

Zinc

Macro Sentiment Remains Strong, LME Zinc Records Four Day Winning Streak [SMM Zinc Morning Comment]

SMM, Aug 28: Overnight, the Chicago and New York Federal Reserve Boards approved a discount rate cut at their July meetings; Libya's El-Feel oil field is reportedly shutting down; Iran's Deputy Defense Minister stated that Iran's response will be unpredictable; the US National Security Council said that if Iran launches an attack, the US will defend Israel; Wang Yi met with US National Security Advisor Sullivan; the 11th session of the Standing Committee of the National People's Congress will be held in Beijing from September 10 to 13; the People's Bank of China and seven other departments jointly issued guidelines; the Ministry of Finance and four other departments jointly issued a notice to improve the policy of duty-free shops within cities.

Overnight, LME zinc opened at $2,920/mt. In the initial trading, bears had the upper hand, and LME zinc operated weakly below the daily moving average. During European trading hours, it attempted to break upwards but failed, hitting a low of $2,888.5/mt. Subsequently, bulls entered at the low, and LME zinc fluctuated upwards, accelerating its rise during the night session. The focus shifted to around $2,940/mt, with a high of $2,945/mt, and finally closed up at $2,936.5/mt, an increase of $18.5/mt or 0.63%. Trading volume decreased to 11,493 lots, and open interest increased by 3,051 lots to 218,000 lots. Overnight, LME zinc recorded four consecutive gains, with the daily K-line focus moving upwards. LME inventory decreased by 250 mt to 255,800 mt, a drop of 0.1%. The expectation of a rate cut pushed the US dollar index lower, leading to a broad rise in non-ferrous metals, with LME zinc's focus moving upwards. Attention should be paid to geopolitical risks in the future.

Overnight, the most-traded SHFE zinc 2410 contract opened at 24,055 yuan/mt. In the initial trading, bulls increased their positions, pushing SHFE zinc to fluctuate upwards along the daily moving average. The focus shifted to around 24,200 yuan/mt, with a high of 24,280 yuan/mt, and finally closed up at 24,225 yuan/mt, an increase of 205 yuan/mt or 0.85%. Trading volume decreased to 83,446 lots, and open interest increased by 5,957 lots to 125,000 lots. The upper Bollinger Bands forming resistance. Under the expectation of reduced production by smelters, bullish sentiment has not yet subsided, and increased positions by funds pushed SHFE zinc to move at a high level.

Tin

Night session SHFE tin prices opened high and moved higher, potentially further suppressing downstream purchasing willingness [SMM Tin Morning Comment]

SMM, August 28: In the night session yesterday, the most-traded SHFE tin futures contract closed at 269,390 yuan/mt, up 3,930 yuan/mt, an increase of 1.48%, with a high of 269,430 yuan/mt and a low of 267,220 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 par with the SHFE 2409 contract, delivery brand prices ranged from par to a premium of 700 yuan/mt over the SHFE 2409 contract, Yunnan Tin brand was quoted at a premium of 700-900 yuan/mt over the SHFE 2409 contract, and imported tin brands were quoted at par with the SHFE 2409 contract. Yesterday, tin prices fluctuated upwards, with some downstream companies making small purchases while others chose to continue observing. Some trading companies made scattered transactions, with a very few trading companies transacting around two truckloads. Overall, the spot market transactions were relatively weak yesterday.

Nickel

On August 27, Jinchuan nickel was quoted at a premium of 1,000-1,100 yuan/mt, with an average of 1,050 yuan/mt, a decrease of 50 yuan/mt compared to 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, an increase of 50 yuan/mt compared to the previous trading day. In the morning, the market fluctuated upwards, but the spot market premium showed little overall fluctuation compared to the previous working day. Nickel briquette prices were 129,950-130,200 yuan/mt, an increase of 1,425 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 2,802 yuan/mt (nickel sulphate prices were 2,802 yuan/mt lower than nickel briquette prices).