SMM Morning Comment For SHFE Base Metals On August 8

SHANGHAI, August 8 (SMM) –

Copper

Overnight, LME copper opened at $8,803.5/mt, narrowly fluctuated to a high of $8,840/mt at the beginning of the session, then broadly fluctuated downward during the session, touching a low of $8,745/mt near the end, and finally closed at $8,750.5/mt, down by 1.93%. Trading volume reached 20,000 lots, and open interest reached 293,000 lots. Overnight, the most-traded SHFE copper 2409 contract opened at 71,400 yuan/mt, touched a high of 71,400 yuan/mt at the beginning of the session, fell to a low level, rebounded during the session, and fell again near the end, touching a low of 70,820 yuan/mt, and finally closed at 70,930 yuan/mt, down by 0.78%. Trading volume reached 50,000 lots, and open interest reached 172,000 lots.

Macro-wise, after the Bank of Japan turned dovish, the US dollar index rebounded, which was bearish for copper prices. Additionally, LME inventories surged by more than 40,000 mt yesterday, heightening market concerns about demand prospects and significantly impacting copper prices. Fundamentally, the decline in copper prices has a certain stimulating effect on consumption demand, but the market still expects copper prices to have room for further decline, with procurement mainly for immediate needs. Furthermore, the previously arrived imported copper flowed into the domestic trade market, impacting spot premiums/discounts. In terms of prices, under the backdrop of strong market concerns, copper prices continued to run weakly.

Aluminum

Market: The most-traded SHFE aluminum 2409 contract opened at 18,885 yuan/mt overnight, reaching a high of 19,025 yuan/mt and a low of 18,820 yuan/mt, and closed at 18,935 yuan/mt, up 15 yuan/mt, or 0.08%. The previous trading day, LME aluminum opened at $2,297.5/mt, reached a high of $2,300/mt and a low of $2,247.5/mt, and closed at $2,273/mt, down $28/mt, or 1.22%.

Summary: On the macro front, the Chinese government continues to boost the domestic economy, global liquidity is gradually increasing, and regional conflicts are escalating, providing upward momentum for aluminum prices. On the fundamentals, aluminum production in July was 3.683 million mt, and operating capacity gradually stabilized in August with limited subsequent increases, indicating that the supply side is gradually peaking. Entering August, downstream aluminum consumption shows signs of stabilizing and recovering, and aluminum ingot inventory is expected to gradually peak. In the short term, both macro and fundamental factors are converging, and aluminum prices may bottom out.

Lead

Overnight, LME lead opened at $1,951.5/mt and fluctuated downward during the Asian session to a low of $1,938.5/mt. Entering the European session, the US dollar index weakened, pushing LME lead climbing to a high of $1,978.5/mt. Towards the end of the session, shorts increased their positions, causing a pullback in LME lead, and it finally closed at $1,953.5/mt, down 0.43%.

Overnight, the most-traded SHFE 2409 lead contract opened at 17,360 yuan/mt and briefly touched a high of 17,395 yuan/mt at the beginning of the session. Dragged down by the decline in LME lead, it pulled back to a low of 17,255 yuan/mt. Later, with the increase in long positions, SHFE lead slightly rebounded, closing at 17,310 yuan/mt, down 0.09%.

Zinc

Overnight, the Bank of Japan turned dovish again! Japan's new top foreign exchange official warned that their stance on forex intervention remains unchanged; participants in the US Fed's reverse repo operations fell to the lowest since June 2021; the White House said a ceasefire agreement in Gaza is close to being reached; Iran stated it is engaging in psychological warfare with Israel and has not taken military action; a poll showed that the competition between US Vice President Harris and former President Trump is very close; the PBOC paused gold purchases for the third consecutive month, with foreign reserves remaining above $3.2 trillion for eight consecutive months; the Ministry of Finance and the Ministry of Emergency Management pre-allocated 465 million yuan again to support provinces severely affected by disasters in emergency rescue and relief efforts; the General Administration of Customs: In the first seven months, China's import and export scale hit a record high for the same period in history; Shenzhen's total service trade import and export in 2023 recorded $130.07 billion, a record high, up 20% YoY.

Overnight, LME zinc opened at $2,602/mt. After initial long-short tussles, LME zinc quickly touched $2,602.5/mt. Subsequently, with increased short positions, LME zinc's focus shifted below the daily moving average, reaching a low of $2,549/mt during European trading hours. Later, with longs entering the market, LME zinc's focus moved back near the daily moving average, recording a V-shaped reversal. During the night session, LME zinc's attempt to test lower levels failed again, and it returned to consolidate around the daily moving average, finally closing down at $2,563/mt, down $49/mt, a drop of 1.88%. Trading volume decreased to 10,982 lots, and open interest increased by 168 lots to 223,000 lots. Overnight, LME zinc recorded five consecutive declines, with the daily K-line focus shifting downward. Overnight, LME inventory decreased by 3,450 mt to 244,375 mt, a drop of 1.39%, with LME inventory recording a reduction. Overnight, a stronger dollar pressured base metals, and concerns about economic recession persisted, leading to weak adjustments in LME zinc.

Overnight, the main SHFE zinc 2409 contract opened higher at 21,900 yuan/mt. After quickly touching 21,990 yuan/mt initially, SHFE zinc fluctuated downward to a low of 21,820 yuan/mt due to long positions entering and short positions closing. Subsequently, with longs entering at lower levels, SHFE zinc's focus moved above the daily moving average. By the end of the session, it dropped slightly, finally closing down at 21,865 yuan/mt, down 140 yuan/mt, a drop of 0.64%. Trading volume decreased to 61,094 lots, and open interest decreased by 350 lots to 82,197 lots. Overnight, SHFE zinc recorded a small bearish candlestick, with the 5-day moving average forming resistance above. Zinc prices fell below the support level of 22,000 yuan/mt, with weak macro sentiment and insufficient momentum for zinc price rebound during the off-season for consumption.

Tin

In the night session yesterday, the most-traded SHFE tin futures contract closed at 246,350 yuan/mt, up 1,820 yuan/mt, an increase of 0.74%, with a high of 247,880 yuan/mt and a low of 244,630 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 800-1,500 yuan/mt for delivery brands and premiums of 1,000-1,700 yuan/mt for Yunxi brand. Tin prices were rangebound yesterday, and downstream producers were mostly in a wait-and-see mode, using inventory for production. Overall, the spot market was relatively quiet yesterday.

Nickel

On August 7, Jinchuan nickel was quoted at a premium of 1,500-1,600 yuan/mt, with an average of 1,550 yuan/mt, a decrease of 50 yuan/mt 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, remaining unchanged from the previous trading day. In the morning, the market fluctuated, and the spot market premium showed little change compared to the previous working day. Nickel briquette prices were 127,600-127,900 yuan/mt, an increase of 300 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 1,500 yuan/mt (nickel sulphate prices were 1,500 yuan/mt lower than nickel briquette prices).