SMM Morning Comment For SHFE Base Metals On August 22

SHANGHAI, August 22 (SMM) –

Copper

The US Bureau of Labor Statistics Revised Down Employment Growth, Copper Prices Rebounded Overnight [SMM Copper Morning Comment]

LME copper opened at $9,257/mt overnight, initially reached a high of $9,276/mt, then fluctuated downward to a low of $9,197/mt, and rebounded at the end of the session to close at $9,249/mt, up 0.74%. Trading volume reached 13,000 lots, and open interest reached 280,000 lots. The most-traded SHFE copper 2409 contract opened at 73,920 yuan/mt overnight, initially declined to a low of 73,540 yuan/mt, then fluctuated upward to a high of 74,040 yuan/mt near the end of the session, and finally closed at 73,840 yuan/mt, up 0.18%. Trading volume reached 16,000 lots, and open interest reached 122,000 lots. Macro side, the US Bureau of Labor Statistics revised down employment growth by 818,000 for the year ending in March, reducing the average monthly growth by about 68,000, marking the largest downward revision since 2009. Additionally, the US Fed's July meeting minutes indicated that the vast majority of officials considered a rate cut in September to be appropriate. Fundamentally, due to the release of warrants, the spot supply of copper cathode increased, putting pressure on premiums and discounts. On the consumption side, with copper prices fluctuating, processing enterprises became more cautious, anticipating another price drop, leading to a decline in demand. Price-wise, there is still some room for copper prices to rise.

Aluminum

US non-farm payrolls were revised down by 818,000. Thailand is investigating the dumping of Chinese aluminum semis [SMM Aluminum Morning Comment]

Overnight, the most-traded SHFE aluminum 2410 contract opened at 19,815 yuan/mt, with a high of 19,815 yuan/mt, a low of 19,705 yuan/mt, and closed at 19,780 yuan/mt, up 30 yuan/mt or 0.15%. Overnight, LME 3M aluminum opened at $2,482.5/mt, with a high of $2,495/mt, a low of $2,452.5/mt, and closed at $2,479/mt, down $23/mt or 0.92%.

Macro side, US non-farm payrolls data saw a significant downward revision, exposing employment downside risks. Additionally, recent US Fed inflation data performed well, and the market continues to trade on the expectation of a rate cut in September, with the US dollar index running weak. Fundamentals side, domestic aluminum ingot inventory continues to show a downward trend, and domestic aluminum supply remains stable at high level. Downstream, industrial extrusion orders have picked up, leading to a slight increase in the operating rate of leading extrusion companies. Meanwhile, in the traditional peak season and under domestic economic stimulus policy, downstream consumption is expected to improve. Recently, external macro sentiment has been friendly, and the supply-demand mismatch has somewhat eased. SMM expects short-term aluminum prices to show a rebound and fluctuate. Continued attention is needed on aluminum consumption and aluminum social inventory changes.

Lead

Overnight, LME lead opened at $2,059/mt and then fluctuated upwards. During the European session, it reached a high of $2,090/mt before slightly consolidating, and finally closed at $2,090/mt, up $29/mt, an increase of 1.41%.

Overnight, the most-traded SHFE lead 2409 contract opened at 17,680 yuan/mt. After initially declining to a low of 17,470 yuan/mt, it rebounded to near the intraday moving average and consolidated, finally closing at 17,545 yuan/mt, down 75 yuan/mt, a decrease of 0.43%.

Zinc

Driven by Overseas Market Trends, SHFE Zinc Focus Shifts Upward [SMM Morning Comment]

US Fed Meeting Minutes: The vast majority of officials believe a rate cut in September is appropriate; US employment figures for the past year through March were revised down by 818,000; US EIA crude oil inventories decreased by 4.649 million barrels last week; China's real estate "white list" projects received financing approval of nearly 1.4 trillion yuan; Two government departments in China: Large-scale equipment upgrades will be implemented in key energy sectors; Eight cities in China are launching special actions to boost IPv6 traffic.

Overnight, LME zinc opened at $2,796.5/mt, and after the opening, it climbed all the way, initially dipping to $2,787/mt, peaking at $2,863/mt during the night session, and then retracing to fluctuate near the daily average line, finally closing up at $2,856/mt, an increase of $61.5/mt or 2.2%. Trading volume increased to 11,199 lots, and open interest decreased by 4,761 lots to 210,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the upper Bollinger Band forming resistance. LME inventory decreased by 1,175 mt to 257,625 mt, a drop of 0.45%. The significant downward revision of US employment growth data raised concerns about the labour market, with market expectations of a rate cut in September, providing macro support for LME zinc's upward movement.

Overnight, the most-traded SHFE zinc 2410 contract opened at 23,650 yuan/mt, initially peaking at 23,680 yuan/mt, briefly fluctuating downward to a low of 23,495 yuan/mt after the opening, then briefly rebounding to near the daily average line, and subsequently narrowly fluctuating along the daily average line, finally closing up at 23,580 yuan/mt, an increase of 40 yuan/mt or 0.17%. Trading volume decreased to 74,729 lots, and open interest increased by 2,831 lots to 105,000 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 5-day moving average providing support below. With continued macro optimism, driven by overseas markets and supported by tight supply at the mine end, SHFE zinc's focus shifted upward again. However, domestic demand remained weak, potentially limiting the upward space for SHFE zinc in the future.

Tin

SHFE tin prices opened higher in the night session and then rebounded after dipping. Yesterday, SHFE tin warrants decreased by 80 mt [SMM Tin Morning Comment].

SMM, August 22: In the night session yesterday, the most-traded SHFE tin futures contract closed at 265,580 yuan/mt, up by 1,360 yuan/mt, an increase of 0.51%. The highest price was 267,250 yuan/mt, and the lowest was 264,000 yuan/mt. During the morning session yesterday, the quotes for various domestic tin ingot brands by trading companies showed little change compared to recent days. Small brand tin ingots were quoted at a premium of 0 to 500 yuan/mt over the SHFE 2409 contract, delivery brand prices were at a premium of 500 to 1,000 yuan/mt over the SHFE 2409 contract, Yunnan Tin brand was quoted at a premium of 1,000 to 1,200 yuan/mt over the SHFE 2409 contract, and imported tin brands were quoted at par with the SHFE 2409 contract. Yesterday's tin price surge led most downstream companies to adopt a wait-and-see attitude towards the current price level, with some downstream companies looking to restock at lower prices. Most trading companies saw scattered transactions, with a few trading companies transacting 20 to 30 mt. Overall, the spot market transactions were relatively flat yesterday.

Nickel

On August 21, Jinchuan nickel was quoted at a premium of 1,000-1,200 yuan/mt, with an average of 1,100 yuan/mt, down 100 yuan/mt from the previous trading day. Norilsk nickel was quoted at a discount of 400-100 yuan/mt, with an average of 250 yuan/mt, down 50 yuan/mt from the previous trading day. In the morning, the market fluctuated slightly upward, but prices remained within the phased range. The spot market premiums showed little overall fluctuation compared to the previous working day. Nickel briquette prices were 128,650-128,950 yuan/mt, an increase of 1,075 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 2,209 yuan/mt (nickel sulphate prices were 2,209 yuan/mt lower than nickel briquette prices).