SMM Morning Comment For SHFE Base Metals August 10

SHANGHAI, Aug 10 (SMM) –

Copper

LME copper prices closed at $8,409/mt overnight, a gain of 0.32%. Trading volume was 19,000 lots and open interest stood at 285,000 lots. The most active SHFE 2309 copper contract prices finished at 68,390 yuan/mt overnight, up 0.29%. Trading volume was 30,000 lots, and open interest stood at 169,000 lots. Domestic consumer prices dipped 0.3% year-on-year in July, but up 0.2% from June. The ex-factory prices of industrial producers fell 4.4% year-on-year and 0.2% month-on-month. Overseas, markets awaited Thursday's U.S. consumer price report for signs of the Fed's monetary policy direction. In terms of fundamentals, supplies in east China were ample due to the continuous inflow of imported copper, limiting gains in spot quotes. In south China, available cargoes were scarce due to deliveries. Spot quotes rose noticeably and market activity increased. Copper prices are expected to remain rangebound at high levels as the market is awaiting US economic data.

Aluminum

Overnight, the most-traded SHFE 2309 aluminium contract opened at 18,480 yuan/mt, with the lowest and highest prices at 18,470 yuan/mt and 18,530 yuan/mt before closing at 18,480 yuan/mt, up 45 yuan/mt or 0.24% from the previous trading day. LME aluminium opened at $2,204/mt on Wednesday with its high and low at $2,222/mt and $2,193.5/mt respectively before closing at $2,197.5/mt, a decrease of $6.5/mt or 0.3% from the previous trading day.
On the macro front, the Fed is expected to raise interest rates again. The US dollar index rebounded, making the overall performance of non-ferrous metals under pressure. China is focusing on expanding the domestic demand and economic stimulus policies continue to be implemented. In terms of fundamentals, aluminum production in Yunnan is speeding up, and pressure on the supply side gradually emerges. Due to floods and other factors in the north during the week, fewer aluminum ingots arrived. The social inventory of aluminum ingots is in a state of destocking, and orders in some downstream sectors increased, but consumption in mainstream markets is still relatively weak. In the short term, the accumulation of aluminum social inventory may lower than expected, and the low-inventory status is difficult to change in the short term, giving support to aluminum prices. With the release of positive sentiment at the macro level plus the current increase in supply and the poor fundamentals of downstream consumption, SMM predicted that the short-term aluminum prices will remain volatile, and follow-up attention should be paid to consumption and inventory.

Lead

LME lead prices closed at $2,140/mt last evening, an increase of 0.87%.

SHFE lead ingot inventory under warrants declined. The most active SHFE 2309 lead contract prices closed at 15,990 yuan/mt last evening, up 0.44%. Open interest fell by 1,019 lots to 99,122 lots.

Zinc

LME zinc prices closed up $9.5/mt or 0.38% at $2,479.5/mt last evening. The trading volume decreased to 7,144 lots, and open interest added 3,081 lots to 205,000 lots. LME zinc inventory shed by 1,175 mt to 88,825 mt. The macro performance is flat, and the market is mostly waiting for more data guidance, and the declining inventory provided support for LME zinc prices. The most active SHFE 2309 zinc contract prices closed at 20,820 yuan/mt overnight, up 125 yuan/mt or 0.6%. The trading volume was down to 63,683 lots, and open interest fell 958 lots to 92,035 lots. The domestic real estate-related policies have provided support for zinc prices. However, in August, the production of refined zinc will remain high and still exert certain pressure. Overall, zinc prices will remain rangebound at the current level.

Tin

Overnight, SHFE 2309 tin contract price quickly increased after the opening, and then shock up slowly. After reaching a high price of around 226,430 yuan/mt, it fell again and finally closed at 225,450 yuan/mt, up 0.09%.

Nickel

SHFE 2309 nickel contract opened at 164,600 yuan/mt at the night session on August 9, and closed at 166,580 yuan/mt, up 640 yuan/mt. Trading volume fell by 4,288 lots, and open interest increased by 1,454 lots.

From a macro perspective, since crude oil inventories were significantly higher than expected, commodities’ prices collectively fell yesterday, and SHFE nickel continued its decline to 166,580 yuan/mt. From a fundamental point of view, affected by the weak downstream demand, even if the nickel prices fell, the purchasing sentiment in the downstream market was still relatively depressed and the trading situation was poor yesterday. Overall, it is expected that the subsequent nickel price will go downward.