SMM Morning Comment For SHFE Base Metals On July 10

SHANGHAI, July 10 (SMM) –
Copper
Overnight, LME copper opened at $9,927/mt, initially reaching a high of $9,952/mt before declining, hitting a low of $9,819/mt near the end of the trading session, and finally closed at $9,875/mt, down 0.22%, with a trading volume of 14,000 lots and an open interest of 329,000 lots. Overnight, the most-traded SHFE copper 2408 contract opened at 80,260 yuan/mt, initially reaching a high of 80,320 yuan/mt before consolidating and then declining to a low of 79,600 yuan/mt, and finally closed at 79,890 yuan/mt, down 0.56%, with a trading volume of 43,000 lots and an open interest of 197,000 lots.
Macro-wise, Fed Chairman Powell stated that the labour market has fully balanced, and inflation is not the only risk faced. Both premature and delayed rate cuts pose risks, and the Fed will avoid giving any signals regarding the timing of rate cuts. The US dollar index surged, suppressing copper prices. Fundamentally, copper prices remained high, with weak demand and low downstream procurement enthusiasm. However, before the delivery of SHFE 2407 contract, sellers are expected to maintain firm spot premiums/discounts. Price-wise, copper prices declined due to macro sentiment, but strong support remains.
Aluminum
Overnight, the most-traded SHFE aluminum 2408 contract opened at 20,415 yuan/mt, reaching a high of 20,440 yuan/mt and a low of 20,270 yuan/mt, and closed at 20,300 yuan/mt, down 160 yuan/mt from the previous trading day, a decrease of 0.78%.
In the previous trading day, LME aluminum opened at $2,534/mt, reached a high of $2,536.5/mt and a low of $2,490.5/mt, and closed at $2,497/mt, down $32/mt from the previous closing price, a decrease of 1.27%.
Macro-wise, US inflation pressure has decreased, and expectations for a Fed rate cut have increased. Fundamentally, domestic aluminium supply is growing, with some capacity yet to resume. Downstream aluminum processing and end-user demand have entered the off-season, with some sectors experiencing demand shocks, leading to a continuous decline in the operating rate of the aluminum processing industry and inventory accumulation. The aluminum market currently lacks driving factors, and short-term aluminum prices are expected to fluctuate. However, close attention should be paid to macro sentiment changes that may cause aluminum price volatility.

Lead
Overnight, LME lead opened at $2,236/mt, initially declining and then consolidating during the Asian session. Entering the European session, the US dollar index slightly rebounded, putting pressure on base metals, with LME lead declining to a low of $2,186/mt. Before the close, it slightly rebounded and finally closed at $2,195/mt, down $42.5/mt, a decrease of 1.9%. Overnight, the most-traded SHFE lead 2408 contract opened at 19,560 yuan/mt, initially reaching a high of 19,590 yuan/mt before declining to a low of 19,430 yuan/mt due to the drag from LME lead, and finally closed at 19,450 yuan/mt, down 205 yuan/mt, a decrease of 1.04%.
Zinc
Overnight, LME zinc opened at $2,959/mt, reaching a high of $2,964.5/mt before hitting a low of $2,921/mt, and closed at $2,940/mt, down $5/mt, a decrease of 0.17%. Trading volume increased to 7,886 lots, and open interest rose by 5,092 lots to 239,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 5-day moving average forming resistance. LME zinc inventory was reduced by 2,300 mt to 256,375 mt, a decrease of 0.89%. The US dollar index rebounded from a low level, putting pressure on LME zinc prices, which continued to decline. Attention should be paid to the upcoming US inflation data release.
Overnight, the most-traded SHFE 2408 zinc contract opened at 24,325 yuan/mt, reaching a high of 24,350 yuan/mt before hitting a low of 24,215 yuan/mt, and closed at 24,280 yuan/mt, down 130 yuan/mt, a decrease of 0.53%. Trading volume was reduced to 63,451 lots, and open interest decreased by 2,104 lots to 77,078 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the middle Bollinger Bands providing support. Affected by overseas futures and weak domestic downstream zinc demand, SHFE zinc lacked upward momentum and continued to fall.
Tin
Overnight, the most-traded SHFE tin futures contract closed at 278,130 yuan/mt, up 690 yuan/mt, an increase of 0.25%, with the highest price at 279,460 yuan/mt and the lowest at 276,150 yuan/mt.
Spot market transaction: During the early trading session yesterday, traders' quotations for premiums and discounts of various domestic tin ingot brands showed little change compared to recent days. Small brand tin ingots were at a discount of around 400-500 yuan/mt against the 2408 contract, delivery brands were at a discount of 0-500 yuan/mt against the 2408 contract, Yunxi brand was at a premium of 200-400 yuan/mt over the 2408 contract, and imported tin brands were at a discount of 600 yuan/mt against the 2408 contract. In the morning, as SHFE tin prices continued to climb, downstream producers maintained a wait-and-see attitude. Most traders had sporadic transactions or no transactions at all. Overall, the spot market transactions were relatively quiet yesterday. Yesterday, SHFE tin warrants increased by 37 mt to 14,811 mt, while LME tin inventory decreased by 25 mt to 4,625 mt.
Nickel
On July 9, Jinchuan nickel was at a premium of 800-1,000 yuan/mt, with an average of 900 yuan/mt, flat compared to the previous trading day. Russian nickel was at a discount of 0-500 yuan/mt, with an average of 250 yuan/mt, also flat compared to the previous trading day. In the morning, as the market fluctuated upward, downstream purchasing willingness decreased. The circulating supply of various brands in the domestic spot market increased, but the overall volume remained low, so spot prices did not change much. Nickel briquette prices were 135,700-136,100 yuan/mt, down 250 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 6,355 yuan/mt (nickel sulphate prices were 6,355 yuan/mt lower than nickel briquette prices).