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SMM Morning Comment For SHFE Base Metals On February 8

iconFeb 8, 2024 09:58
LME copper prices opened at $8412/mt and closed at $8308/mt overnight, a drop of 1.11%, with the low-end of $8295/mt and the high-end of $8425.5/mt.



LME copper prices opened at $8412/mt and closed at $8308/mt overnight, a drop of 1.11%, with the low-end of $8295/mt and the high-end of $8425.5/mt. The trading volume was 21,000 lots, and open interest stood at 289,000 lots. SHFE 2403 copper opened at 68140 yuan/mt overnight and declined to a low of 67670 yuan/mt, closing at 67670 yuan/mt, down 0.59%. Trading volume was 19,000 lots, and open interest stood at 126,000 lots. On the macro front, copper prices have been under pressure due to the slightly higher U.S. dollar index and the lackluster domestic consumption before the Chinese New Year. In terms of fundamentals, in terms of consumption, on the last trading day before the Chinese New Year, most companies have closed, and there were almost no transactions in the market. On the whole, the supply side remained ample. In terms of price, overall, domestic demand is deserted before the holidays, which is expected to have a certain drag on copper prices.


The most-traded SHFE 2403 aluminum contract opened at 18,900 yuan/mt overnight, with its low and high at 18,815 yuan/mt and 18,910 yuan/mt before closing at 18,845 yuan/mt, down 0.26%. LME aluminium opened at $2,230.5/mt on Wednesday, with its high and low at $2,234/mt and $2,214.5/mt respectively before closing at $2,221.5/mt, down 0.34%.

As CNY is drawing near, inventory grew amid subdued consumption. Transactions in the spot market was sluggish, in line with market expectations. From a macro perspective, expectations for an interest rate cut by the Federal Reserve in March fell. The Chinese government continued to stress efforts to boost market confidence. In the short term, aluminium prices are expected to move rangebound, and we will continue to pay attention to whether unexpected news from the macro perspective will disrupt market sentiment.


LME lead open at $2117.5/mt and moved sideways during the Asian trading hours yesterday, declining to $2095/mt during the European trading hours. It finally dropped and closed at $2098.5/mt, down $18/mt or 0.85%.

The most active SHFE 2403 lead contract prices opened at 16180 yuan/mt and touched 16265 yuan/mt before closing at 16205 yuan/mt, up 35 yuan/mt or 0.22%.


LME zinc opened at $2435/mt last evening, and hit a high of $2441/mt before falling back to $2396.5/mt, and closed at $2409.5/mt, a decrease of $22/mt or 0.90%. The trading volume increased to 12719 lots, and open interest increased 1317 lots to 228,000 lots. LME zinc inventory grew by 9675 mt or 4.92% to 206450 mt. Federal Reserve officials continued to maintain hawkish statements, macro bearish sentiment continued, and LME inventories increased significantly. Support for zinc prices weakened.

The most active SHFE 2403 zinc contract opened at 20505 yuan/mt and fell 110 yuan/mt or 0.54% to close at 20420 yuan/mt, with the high-end of 20520 yuan/mt and the low-end of 20400 yuan/mt. Trading volumes decreased to 24007 lots and open interest fell 446 lots to 74955 lots. Downstream and traders are basically on holiday this week. Downstream demand has dropped to the lowest level this year. Spot trading has continued to be light. Poor demand has weakened support for zinc prices.


SHFE 2403 tin contract inched higher and remained at highs before closing at 212,430 yuan/mt overnight, up 1.31%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as below. Small brand tin ingots were offered at discounts of 300 yuan/mt against SHFE 2403 tin contract, versus premiums of 0-500 yuan/mt for delivery brands, premiums of 700-800 yuan/mt for Yunxi brand, and discounts of 600 yuan/mt for imported brand tin ingots. Tin prices moved rangebound in early trading yesterday and rebounded in night session. Downstream companies barely showed any purchasing interest before CNY holidays.


Overnight, the most-traded SHFE nickel contract opened at 123860 yuan/mt, and closed at 124050 yuan/mt, down 910 yuan/mt. Trading volume fell 25935 lots, and open interest decreased by 2623 lots. On the macro front, the Federal Reserve's interest rate meeting announced on the evening of February 1st showed that the interest rate range for February would remain unchanged. Powell said that expectations for an interest rate cut during the year still exist, but there is no possibility of an interest rate cut in the short term. Spot nickel market was quiet as the Chinese New Year holidays are just around the corner. Nickel price is expected to swing on a soft note.

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