SMM Morning Comment For SHFE Base Metals On July 25

SHANGHAI, July 25 (SMM) –

Copper

LME copper opened at $9,174.5/mt overnight, initially reaching a high of $9,174.5/mt, then touching a low of $9,050/mt at the end of the trading session, and finally closed at $9,050.5/mt, down 1.16%. Trading volume reached 22,000 lots, and open interest reached 297,000 lots. The most-traded SHFE 2409 copper contract opened at 74,800 yuan/mt overnight, initially reaching a high of 74,800 yuan/mt, then touching a low of 74,130 yuan/mt at the end of the trading session, and finally closed at 74,180 yuan/mt, down 0.88%. Trading volume reached 56,000 lots, and open interest reached 182,000 lots. Macro side, LME copper inventories continued to increase and market concerns about consumption intensified, impacting copper prices. The market saw an increase in selling, and open interest in copper futures continued to decline, leading to a sustained drop in copper prices. Fundamentals side, as copper prices continued to fall, more downstream companies adopted a wait-and-see attitude, and sellers faced some pressure to offload their stocks. Attention is on when copper prices will rebound. Price side, with strong market concerns, copper prices face significant upward pressure.

Aluminum

Market: The most-traded SHFE 2409 aluminum contract opened at 19,350 yuan/mt overnight, reaching a high of 19,360 yuan/mt and a low of 19,255 yuan/mt, and closed at 19,270 yuan/mt, down 50 yuan/mt, a decrease of 0.26%. The previous trading day, LME aluminum opened at $2,296/mt, reached a high of $2,320.5/mt and a low of $2,286/mt, and closed at $2,295/mt, down $2.5/mt, a decrease of 0.15%.

Summary: On the macro front, China lowered deposit rates, and Canada's rate cut was in line with expectations, leading to increasing market liquidity. On the fundamentals, domestic aluminium supply continues to grow, with a significant YoY increase in net imports of primary aluminium. However, downstream aluminum processing and end-user demand have entered the off-season, with the operating rate in the aluminum processing industry hitting a low point, and the effects of some stimulus measures have yet to materialize. Social inventory remains at a three-year high for the same period, and spot discounts persist. In the short term, aluminum fundamentals are relatively stable, continuing to exert downward pressure on aluminum prices, while macro fluctuations are relatively large. In the short term, attention should be focused on the impact of macro changes on aluminum prices.

Lead

Overnight, LME lead opened at $2,058/mt. After several consecutive days of decline, LME lead cash-to-three-month contango narrowed to -$24.38/mt, and the downward trend also slowed down. LME lead fluctuated between $2,050-2,070/mt. However, during the night session, LME lead saw an expanded decline, reaching a low of $2,035.5/mt, once again hitting the lowest level since April 3, 2024, and eventually closed at $2,038.5/mt, down 0.75%, marking an eight-day drop.

Overnight, lead warrant inventory decreased. The most-traded SHFE 2409 lead contract opened at 19,180 yuan/mt. However, the impact of the expected domestic lead ingot supply resumption continued to ferment. SHFE lead showed a trend of moving downwards after a higher opening, falling below 19,000 yuan/mt again, eventually closing at 18,945 yuan/mt, down 0.13%. The open interest rose to 123,000 lots, an increase of 1,220 lots compared to the previous trading day.

Zinc

Overnight, LME zinc opened at $2,696/mt. Initially, longs reduced positions, causing LME zinc to fluctuate downward around $2,675/mt. During European trading hours, shorts reduced positions, leading LME zinc to quickly rise and peak at $2,718/mt. However, due to insufficient upward momentum, it dipped to $2,670.5/mt during the night session and eventually closed lower at $2,674.5/mt, down $28/mt or 1.04%. Trading volume reduced to 11,751 lots, and open interest decreased by 681 lots to 219,000 lots. Overnight, LME zinc recorded a bearish candlestick, with LME zinc inventory decreasing by 1,875 mt to 245,550 mt, a drop of 0.76%. This week, macro sentiment has been weak, and LME zinc has been continuously declining. The market is awaiting the US GDP and PCE data tonight to validate expectations of a US Fed rate cut. It is expected that LME zinc will swing on a soft note today.

Overnight, the most-traded SHFE zinc 2409 contract opened at 23,050 yuan/mt. Initially, SHFE zinc briefly touched 23,075 yuan/mt, but then shorts increased positions, causing SHFE zinc to fluctuate downward, hitting a low of 22,825 yuan/mt. It eventually closed lower at 22,830 yuan/mt, down 210 yuan/mt or 0.91%. Trading volume reduced to 69,027 lots, and open interest increased by 3,694 lots to 98,687 lots. Overnight, SHFE zinc recorded a bearish candlestick. The supply is tight in the near term but loose in the long term, and there has been no substantial shortage of zinc ingots, weakening support for zinc prices. The market is awaiting more macro guidance and tonight's US economic data. It is expected that SHFE zinc will swing on a soft note today.

Tin

Yesterday, the night session of the most-traded SHFE tin contract closed at 249,520 yuan/mt, up 1,760 yuan/mt, with an increase of 0.71%. The highest price was 254,000 yuan/mt, and the lowest was 248,600 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 0-300 yuan/mt over SHFE 2408 tin contract, versus premiums of 500-1,000 yuan/mt for delivery brands and premiums of 1,000-1,200 yuan/mt for Yunxi brand. Yesterday morning, SHFE tin prices surged significantly during the night session, leading to a decrease in downstream procurement enthusiasm. Overall, the activity in the spot market decreased yesterday.

Nickel

On July 24, Jinchuan nickel was quoted at a premium of 1,800-2,000 yuan/mt, with an average of 1,900 yuan/mt, flat compared to the previous trading day. Norilsk nickel was quoted at a discount of 50 yuan/mt to a premium of 100 yuan/mt, with an average premium of 25 yuan/mt, down 75 yuan/mt from the previous trading day. In the morning, as the market fluctuated downward, spot premiums saw a slight increase. Nickel briquette prices were 126,500-126,800 yuan/mt, down 450 yuan/mt from the previous day. The price spread between nickel briquette and nickel sulphate was about 2,895 yuan/mt (nickel sulphate prices were 2,895 yuan/mt higher than nickel briquette prices).