SMM Lead Morning Comment: SHFE and LME lead prices closed lower

LME lead prices inched down and finally closed at $2103.5/mt in overnight trading, down $25.5/mt, or 1.2%. The contract fell for three consecutive days.

Overnight, SHFE 2309 tin contract price shook and fell sharply at the opening.

LME zinc prices closed down $47/mt or 1.96% at $2,351/mt yesterday evening. The trading volume increased to 9,767 lots, and open interest increased 501 lots to 209,000 lots.  LME zinc inventories increased by 375 mt to 92,175 mt, an increase of 0.41%. Overnight, the Fed's hawkish remarks bolstered the US dollar and that put pressure on LME zinc prices.

According to SMM survey, social lead ingot inventory across five major regions in China totalled 50,800 mt as of July 31, up 5,200 mt from July 28 and 9,100 mt from July 24, the highest in four months.

In July 2023, Indonesian NPI output was 119,400 mt in nickel content, a 2.65% MoM decrease and a 30.8% YoY increase.

China's copper cathode output in July was 925,900 mt, an increase of 8,000 mt or 0.9% month-on-month, and a growth of 10.2% year-on-year; The output increased 23,800 mt compared with the expected 902,100 mt.

The following table shows the ferrous and nonferrous metals movement on the SHFE and DCE on Aug 10, 2023

Overnight, U.S. climate envoy Kerry held talks with Chinese officials, saying that China-U.S. climate relations still need “more work”; the IMF said that the appreciation of the dollar would hit emerging markets more than developed economies; China will announce July LPR on Thursday, and Reuters polls show that expectations for stability are unprecedentedly consistent; South Africa said that Russian President Vladimir Putin will not attend the BRICS summit in August.

The U.S. Department of Labor announced that the annual rate of CPI in June fell from 4% in June to 3%, lower than the expected value of 3.1%, the reaction to the current U.S. inflation has eased, the market from the pessimistic expectations of the U.S. for two consecutive interest rate hikes to the year to raise interest rates by only 25 benchmark points.

LME zinc prices closed with gains overnight. LME zinc stocks fell 775 mt to 72,150 mt. The U.S. consumer price index (CPI) rose 3.0% year-on-year in June, the smallest year-on-year increase since March 2021, after rising 4% in May. As the Fed's interest rate hike expectations weakened, the U.S. dollar index dipped to a a-year low point.