SMM Morning Comment For SHFE Base Metals On August 7

SHANGHAI, August 7 (SMM) –

Copper

Overnight, LME copper opened at $8,802.5/mt, initially dipped below $8,802.5/mt, then fluctuated upwards, reaching a high of $8,939/mt near the end of the trading session, and finally closed at $8,923/mt, up by 0.77%. Trading volume reached 21,000 lots, and open interest reached 292,000 lots. Overnight, the most-traded SHFE copper 2409 contract opened at 70,850 yuan/mt, initially dipped below 70,850 yuan/mt, rose during the session, reaching a high of 71,970 yuan/mt, consolidated at the end of the trading session, and finally closed at 71,810 yuan/mt, up by 0.9%. Trading volume reached 68,000 lots, and open interest reached 171,000 lots.

Macro-wise, the US Fed indicated that the threshold for an emergency rate cut is very high, and the Fed will debate in September whether to cut rates by 50 basis points. Global market concerns about the economy have eased, and copper prices have rebounded along with the financial markets, but market participants remain cautious.

Fundamentals-wise, copper prices have significantly declined, prompting many end-users to release orders, stimulating a demand recovery. However, due to the large drop in copper prices, some smelters have a lower willingness to sell. Overall, copper prices remain the most crucial factor affecting demand, and the market is watching whether copper prices will continue to decline. In terms of prices, the market maintains a cautious attitude, and copper prices are unlikely to sustain a significant rebound.

Aluminum

Market: Overnight, the most-traded SHFE aluminum 2409 contract opened at 18,910 yuan/mt, reaching a high of 19,030 yuan/mt and a low of 18,885 yuan/mt, and closed at 19,020 yuan/mt, up 225 yuan/mt, an increase of 1.20%. The previous trading day, LME aluminum opened at $2,263.5/mt, reached a high of $2,305/mt and a low of $2,238/mt, and closed at $2,301/mt, up $39/mt, an increase of 1.72%.

Summary: On the macro side, the Chinese government continues to boost the domestic economy, the US Fed's rate cut expectations are increasing, and regional conflict situations are escalating, providing upward momentum for aluminum prices. On the fundamentals side, aluminum supply is growing while demand remains bleak. Preliminary estimates for July's aluminum production are around 3.68 million mt, with social inventory at a high level for the same period, putting pressure on aluminum prices. In the short term, both macro and fundamental factors are mixed, and aluminum prices are expected to fluctuate widely.

Lead

Overnight, LME lead opened at $1,946/mt and fluctuated downward to $1,917/mt during the Asian session; entering the European session, bulls increased their positions, pushing LME lead up to $1,975/mt, and it finally closed at $1,962/mt, up 0.23%.

Overnight, the most-traded SHFE 2409 lead contract opened at a low of 17,225 yuan/mt, and after the opening, bulls increased their positions, causing SHFE lead to fluctuate upward to 17,435 yuan/mt, and it finally closed at 17,405 yuan/mt, up 0.84%.

Zinc

Overnight, the US Fed's "mouthpiece" stated that the threshold for an emergency rate cut is very high, and the Fed will debate whether to cut rates by 50 basis points in September. The White House said it does not believe that Iran or Hezbollah have begun responding to Israel's actions. Yahya Sinwar, considered the mastermind behind the "10.7 attack," has become the new political bureau leader of Hamas. The GDPNow model has raised its forecast for US Q3 GDP growth. Harris officially received the Democratic presidential nomination, with Minnesota Governor Tim Walz as her running mate. The US Department of Energy continues to replenish the strategic crude oil reserve. In China, three departments announced that they will focus on nine special actions to effectively promote the construction of a new power system. In Guangzhou's Huadu District, buying a new house may grant "quasi-household registration." The local housing and construction bureau confirmed the policy.

Overnight, LME zinc opened at $2,650.5/mt. During the initial long-short tussle, it reached a high of $2,662.5/mt. Subsequently, as bulls retreated from the high, LME zinc fluctuated downward. During European trading hours, the focus shifted to around $2,600/mt for consolidation. Attempts to break above failed, and it dipped to $2,575/mt. In the night session, LME zinc saw a slight pullback, fluctuating along the average daily line, and finally closed lower at $2,612/mt, down $30/mt, a decline of 1.14%. Trading volume decreased to 12,053 lots, and open interest increased by 2,388 lots to 223,000 lots. Overnight, LME zinc recorded four consecutive bearish candles, with various moving averages forming resistance above. Overnight, LME zinc inventory surged by 18,050 mt to 247,825 mt, an increase of 7.86%, shifting from a decline to an increase. Overnight, as funds entered the market at low levels, global stock markets rebounded, easing market sentiment. However, concerns about an economic recession persisted, and LME zinc continued to operate weakly.

Overnight, the most-traded SHFE zinc 2409 contract opened at an intraday low of 21,990 yuan/mt. SHFE zinc shorts mainly exited the market, with the focus slightly lifting and narrowly fluctuating around the average daily line. During this period, it reached a high of 22,210 yuan/mt and finally closed lower at 22,120 yuan/mt, down 20 yuan/mt, a decline of 0.09%. Trading volume decreased to 83,764 lots, and open interest decreased by 128 lots to 82,705 lots. Overnight, SHFE zinc recorded a bullish candle, with the lower Bollinger Bands providing support. Overnight, market sentiment eased somewhat, and other non-ferrous metals showed signs of stabilization. Meanwhile, support from the zinc supply side remained, suggesting limited further downside for zinc prices.

Tin

In the night session yesterday, the most-traded SHFE tin futures contract closed at 246,740 yuan/mt, up 4,640 yuan/mt, an increase of 1.92%, with a high of 246,800 yuan/mt and a low of 240,630 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 800-1,800 yuan/mt for delivery brands and premiums of 1,000-1,400 yuan/mt for Yunxi brand. Tin prices surged and then fell back yesterday, with downstream producers showing a strong wait-and-see sentiment in the morning. However, purchasing enthusiasm increased in the afternoon as tin prices declined. Overall, the spot market was relatively active yesterday.

Nickel

On August 6, Jinchuan nickel was quoted at a premium of 1,500-1,700 yuan/mt, with an average of 1,600 yuan/mt, flat compared to the previous trading day. Norilsk nickel was quoted at a discount of 100 yuan/mt to a premium of 200 yuan/mt, with an average premium of 50 yuan/mt, up 50 yuan/mt from the previous trading day. In the morning, the market fluctuated, and spot premiums showed little change compared to the previous working day. Nickel briquette prices were 127,300-127,600 yuan/mt, down 600 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 1,268 yuan/mt (nickel sulphate prices were 1,268 yuan/mt lower than nickel briquette prices).