SMM Morning Comment For SHFE Base Metals On August 16

SHANGHAI, August 16 (SMM) –

Copper

Concerns about a US economic recession faded, and copper prices rose overnight [SMM Copper Morning Comment]

Overnight, LME copper opened at $9,083/mt, initially dipped to $9,066/mt, then climbed to a high of $9,175/mt during the session, and finally closed at $9,138/mt, up 2.16%. Trading volume reached 21,000 lots, and open interest reached 286,000 lots. The most-traded SHFE copper 2409 contract opened at 73,340 yuan/mt, initially dipped to 73,090 yuan/mt, then rose to a high of 73,980 yuan/mt during the session, and finally closed at 73,750 yuan/mt, up 1.92%. Trading volume reached 53,000 lots, and open interest reached 158,000 lots.

Macro side, the US July retail sales MoM, known as the "scary data," recorded 1%, far exceeding expectations. Initial jobless claims last week also hit the lowest level since July, reducing the risk of a US economic recession. Meanwhile, domestic consumption improved, and the risk of supply disruptions at Chilean copper mines pushed copper prices higher. Fundamentally, supply side, overall arrivals decreased. Demand side, current downstream consumption has some support. As of Thursday, August 15, SMM copper stocks in major regions nationwide decreased by 17,200 mt WoW to 301,600 mt, and by 36,800 mt compared to last Thursday, marking the fifth consecutive week of destocking, with the destocking speed accelerating. Overall, copper prices are expected to have some support, and today's copper prices are expected to remain high.

Aluminum

Concerns about overseas economic recession eased, and aluminum inventory reduction strengthened aluminum prices [SMM Aluminum Morning Meeting Summary]

Market: The most-traded SHFE aluminum 2409 contract opened at 19,205 yuan/mt overnight, with a high of 19,350 yuan/mt, a low of 19,145 yuan/mt, and closed at 19,350 yuan/mt, up 240 yuan/mt, an increase of 0.08%. On Thursday, LME 3M aluminum opened at $2,325/mt, with a high of $2,370/mt, a low of $2,321.5/mt, and closed at $2,356/mt, up $29/mt, an increase of 1.25%.

Summary: On the macro front, U.S. employment data and retail data performed well, alleviating concerns about economic recession and warming the macro atmosphere, leading to bears/shorts in non-ferrous metals exiting their positions. On the fundamental side, domestic aluminium supply has basically peaked, with only sporadic resumption of production expected in regions like Guizhou and Sichuan in the future. Downstream consumption may improve under the traditional peak season and domestic economic stimulus policy. The turning point for aluminum social inventory reduction may appear, reducing the supply-demand mismatch on the fundamental side. Additionally, recent strong fluctuations in alumina prices provided strong support on the cost side for aluminium. SMM expects that aluminum prices may bottom out and show a rebound trend. Continued attention should be paid to aluminum consumption and aluminum social inventory changes.

Lead

Overseas lead ingot continued destocking, LME lead showed a fluctuating upward trend [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,011/mt. Against the backdrop of continued decline in LME lead inventory, LME lead steadily rose day by day, reaching a daily high of $2,057/mt. During the night, better-than-expected U.S. data alleviated market recession fears, while the dollar rose sharply. LME lead showed a trend of rising and then falling, finally closing at $2,036/mt, up 0.92%.

Overnight, the most-traded SHFE lead 2409 contract opened at 17,585 yuan/mt, quickly surged above 17,700 yuan/mt after the opening, and attempted to break through 17,800 yuan/mt but failed. In the latter part of the trading session, the SHFE lead saw intensified long-short battles, with SHFE lead hovering around 17,750 yuan/mt for a long time, finally closing at 17,755 yuan/mt, up 1.49%. Its open interest was 63,217 lots, a decrease of 1,969 lots from the previous trading day.

Zinc

Concerns about economic recession ease, LME zinc prices fluctuate upward [SMM Zinc morning comment]

Overnight, LME zinc opened at $2,703/mt. At the beginning of the session, LME zinc briefly dipped to $2,696/mt. Subsequently, with shorts reducing their positions, LME zinc fluctuated upward, reaching a high of $2,790/mt during the night session, and finally closed up at $2,784/mt, an increase of $79/mt or 2.92%. The trading volume decreased to 11,035 lots, and the open interest decreased by 2,490 lots to 217,000 lots. Overnight, LME zinc recorded a bullish candlestick, with LME inventory decreasing by 1,675 mt to 260,600 mt, a decline of 0.64%. U.S. retail sales data far exceeded expectations, alleviating market concerns about an economic recession, leading to a general rise in base metals. It is expected that LME zinc prices will fluctuate today.

Overnight, the most-traded SHFE zinc 2410 contract opened at 23,000 yuan/mt. At the beginning of the session, SHFE zinc briefly dipped to 22,920 yuan/mt. Subsequently, with longs increasing their positions, SHFE zinc prices fluctuated upward, reaching a high of 23,255 yuan/mt by the end of the session, and finally closed up at 23,225 yuan/mt, an increase of 385 yuan/mt or 1.69%. The trading volume decreased to 66,416 lots, and the open interest increased by 1,625 lots to 86,492 lots. Overnight, SHFE zinc recorded a bullish candlestick. The macro sentiment was positive, driven by the overseas futures market, coupled with the continued tight domestic mine supply, leading to a rebound in SHFE zinc prices. It is expected that SHFE zinc will mainly fluctuate and consolidate today.

Tin

SHFE tin prices surged significantly during the night session. The spot market transactions were sluggish yesterday [SMM Tin Morning News]

The closing price of the most-traded SHFE tin contract in the night session yesterday was 264,130 yuan/mt, up 7,500 yuan/mt, an increase of 2.92%. The highest price was 264,690 yuan/mt, and the lowest was 258,300 yuan/mt. Yesterday, small brand tin ingots were offered at premiums of 700-1,000 yuan/mt over SHFE 2409 tin contract, versus premiums of 500-1,000 yuan/mt for delivery brands, premiums of 1,000-1,200 yuan/mt for Yunxi brand, and premiums 0f 200 yuan/mt imported brand tin ingots. Tin prices surged significantly at the end of the session yesterday, with most downstream companies remaining on the sidelines and showing low purchasing interest. Overall, the spot market was relatively quiet yesterday.

Nickel

On August 15, Jinchuan nickel was quoted at a premium of 1,400-1,500 yuan/mt, with an average of 1,450 yuan/mt, up 50 yuan/mt compared to the previous trading day. Norilsk nickel was quoted at a discount of 300 yuan/mt to a premium of 100 yuan/mt, with an average discount of 100 yuan/mt, remaining flat compared to the previous trading day. In the morning, the market fluctuated downward, and the spot market premium showed little fluctuation compared to the previous working day. Nickel briquette prices were 126,000-126,350 yuan/mt, down 275 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 38 yuan/mt (nickel sulphate prices were 38 yuan/mt lower than nickel briquette prices).