SMM Morning Comment For SHFE Base Metals On July 9

SHANGHAI, July 9 (SMM) –

Copper

Overnight, LME copper opened at $9,965/mt, initially reaching a high of $10,000/mt, then reaching a low of $9,909/mt, and finally closed at $9,917/mt. Trading volume reached 17,000 lots, and open interest reached 326,000 lots. Overnight, the most-traded SHFE 2408 copper contract opened at 80,470 yuan/mt, initially reaching a high of 80,650 yuan/mt, then reaching a low of 80,020 yuan/mt, and finally closed at 80,170 yuan/mt, down 0.24%. Trading volume reached 39,000 lots, and open interest reached 198,000 lots. On the macro front, the latest survey from the New York Fed showed that the median one-year-ahead inflation expectations in the US for June fell from the previous value of 3.17% to 3.02%, marking the second consecutive month of decline, with the US dollar index running at a low level. Fundamentally, as copper prices remained high, downstream procurement remained cautious, with spot premiums facing pressure. According to SMM, as of Monday, July 8, SMM copper stocks in major regions nationwide decreased by 11,800 mt compared to last Thursday to 398,000 mt, with total stocks 272,400 mt higher than 125,600 mt in the same period last year. In terms of prices, the market is still waiting for more guidance, and copper prices are expected to maintain wide fluctuations at high levels.

Aluminum

Overnight, the most-traded SHFE 2408 aluminum contract opened at 20,370 yuan/mt, reaching a high of 20,460 yuan/mt and a low of 20,350 yuan/mt, and closed at 20,365 yuan/mt, up 20 yuan/mt from the previous trading day, an increase of 0.10%. LME aluminum opened at $2,537/mt in the previous trading day, with a high of $2,541/mt and a low of $2,520/mt, and closed at $2,529/mt, down $10.5/mt from the previous trading day, a decrease of 0.41%.

Macro side, the market expectations of a US Fed rate cut were further strengthened. Fundamentals side, domestic aluminum supply is increasing, with some capacity yet to be resumed. Downstream aluminum processing and end-user demand have entered the off-season, with operating rates declining. Therefore, social inventory increased. The aluminum market fundamentals lack 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 $2,236.5/mt, reaching a high of $2,259/mt, and closed at $2,237.5/mt, down $4/mt, a decrease of 0.18%. Overnight, the most-traded SHFE 2408 lead contract opened at 19,675 yuan/mt, reaching a high of 19,810 yuan/mt, then falling to 19,570 yuan/mt, and closed at 19,600 yuan/mt, down 30 yuan/mt, a decrease of 0.15%.

Zinc

Overnight, LME zinc opened at $3,001/mt, initially reaching a high of $3,005/mt, then dropping to a low of $2,942.5/mt, and closed at $2,945/mt, down $55/mt or 1.83%. Trading volume was reduced to 7,725 lots, and open interest increased by 1,215 lots to 234,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 10-day moving average providing support below. LME zinc inventory remained flat at 258,675 mt. Recently, LME zinc surged due to expectations that the US Fed might cut interest rates in September. With the continued high zinc ingot inventory putting pressure on zinc prices, LME zinc turned to a downward trend.

Overnight, the most-traded SHFE 2408 zinc contract opened at 24,420 yuan/mt, reaching a high of 24,530 yuan/mt, then dropping to a low of 24,345 yuan/mt, and closed at 24,390 yuan/mt, up 20 yuan/mt or 0.08%. Trading volume was reduced to 59,915 lots, and open interest increased by 447 lots to 83,807 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 5-day moving average forming resistance above. SMM zinc ingot social inventory in China increased by 2,000 mt to 199,900 mt. Amid the off-season for consumption, domestic spot demand was weak, dragging SHFE zinc downward.

Tin

Overnight, the most-traded SHFE tin contract closed at 275,240 yuan/mt, down 2,490 yuan/mt, a decrease of 0.90%, with the highest at 278,160 yuan/mt and the lowest at 274,750 yuan/mt.

Spot market transaction: During the morning session, traders' quotations for premiums and discounts of various domestic tin ingot brands did not change much compared to recent days. Small brand tin ingots were at a discount of around 400-500 yuan/mt against the 2408 contract, delivery brand was at a discount of 0-500 yuan/mt against the 2408 contract, and Yunxi brand was at a premium of 200-400 yuan/mt over the 2408 contract. There were no quotations for imported tin brands. Yesterday morning, SHFE tin prices surged and then fell back. Downstream producers maintained a cautious sentiment, sticking to a strategy of restocking as needed. Most traders had scattered transactions. Overall, the spot market transactions were relatively sluggish yesterday.

Nickel

On July 8, Jinchuan nickel was at a premium of 800-1,000 yuan/mt, with an average of 900 yuan/mt, down 200 yuan/mt compared to the previous trading day. Russian nickel was at a discount of 0-500 yuan/mt, with an average of 250 yuan/mt, 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, leading to a decline in premiums for all brands. Nickel briquette prices were 136,000-136,300 yuan/mt, up 1,500 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 6,605 yuan/mt (nickel sulphate prices were 6,605 yuan/mt lower than nickel briquette prices).