SMM Morning Comment For SHFE Base Metals On July 4

SHANGHAI, July 4 (SMM) –
Copper
Overnight, LME copper opened at $9,817/mt, with the initial session low at $9,729.5/mt. It then climbed steadily, reaching a session high of $9,912.5/mt by the end of the trading session, before slightly fluctuating and finally closing at $9,852/mt, with a gain of 1.98%. Trading volume reached 24,000 lots, and open interest reached 326,000 lots.
Overnight, the most traded SHFE 2408 copper contract opened at 79,990 yuan/mt, initially hitting a session low of 79,790 yuan/mt. It then rose and hovered around the current level, reaching a session high of 80,520 yuan/mt during the fluctuations, and finally closed at 80,230 yuan/mt, with a gain of 1.44%. Trading volume reached 53,000 lots, and open interest reached 202,000 lots.
Macro side, US June ADP non-farm payrolls fell to 150,000, the smallest increase since January 2024. Initial jobless claims for last week rose to 238,000, higher than the expected 235,000. The US June ISM non-Manufacturing PMI recorded 48.8, far below expectations and the lowest since May 2020. A series of weak economic data increased the likelihood of a rate cut, causing the US dollar index to fall, and gold, silver, and copper prices to rise in unison. The US Fed Minutes also showed that the vast majority of officials believed economic growth was gradually cooling, and the Fed was waiting for more information to gain confidence in cutting rates. Meanwhile, US EIA crude oil inventories for the week ending June 28 decreased by 12.157 million barrels, far exceeding the expected drop of 680,000 barrels, pushing oil prices higher, which also supported copper prices. Fundamentals side, an increase in warrants reduced the available spot supply, and sellers were actively holding prices firm. Currently, both supply and demand sides are tightening. Overall, copper prices are expected to remain high today.
Aluminum
Overnight, the most-traded SHFE aluminum contract 2408 opened at 20,530 yuan/mt, reached a high of 20,550 yuan/mt, a low of 20,475 yuan/mt, and closed at 20,475 yuan/mt, down 15 yuan/mt, a decrease of 0.07%. The previous trading day, LME aluminum opened at $2,516/mt, reached a high of $2,561.5/mt, a low of $2,514.5/mt, and closed at $2,549.5/mt, up $33.5/mt from the previous close, an increase of 1.33%.
On the macro front, data released on Wednesday indicated that the US economy is slowing down, hitting the dollar. Lower-than-expected economic data strengthened expectations that the US Fed may start cutting interest rates later this year. The market is currently awaiting the non-farm payroll report to be released on Friday to further clarify the path of US rate cuts. Fundamentally, domestic aluminum supply continues to grow; the arrival of the off-season for consumption weakened the operating rate of downstream aluminum producers, and aluminum ingot inventory remains at a high level for the same period. Spot prices maintain discounts. In the short term, aluminum prices are expected to move rangebound. In the near term, we need to continue to focus on the US Fed's rate cut process, domestic consumption performance, and inventory changes.

Lead
Overnight, LME lead opened at $2,201/mt. With the weakening of the US dollar index, most base metals prices rebounded. Meanwhile, LME lead inventory decreased by 3,200 mt. LME lead stayed at highs throughout the day. Although it fell below the $2,200/mt mark during the session, it quickly rebounded and finally closed at $2,217.5/mt, up by 0.73%.
Overnight, the most-traded SHFE lead 2408 contract opened at 19,500 yuan/mt. Affected by the opening of the lead ingot import window and the reduction in domestic secondary lead production, after the opening, the market was in a tug-of-war between bulls and bears. With SHFE lead hovering around 19,500 yuan/mt for most of the session, finally closing at 19,510 yuan/mt, down by 0.2%. Its open interest reached 90,434 lots, a decrease of 1,599 lots compared to the previous trading day.

Zinc

Overnight, LME zinc opened at $2,924.5/mt, briefly dipping to $2,920/mt, then reaching a high of $3,005.5/mt, and finally closed at $2,983/mt, up $64/mt, an increase of 2.13%. Trading volume increased to 10,161 lots, and open interest decreased by 5,012 lots to 233,000 lots. Overnight, LME zinc recorded a large bullish candlestick, with LME zinc inventory reduced by 750 mt to 259,025 mt, a decrease of 0.29%. Macro sentiment was bullish, with US economic data showing signs of weakening, reigniting expectations of interest rate cuts. The US dollar weakened, and non-ferrous metals prices generally rose. It is expected that LME zinc will run strong today.

Overnight, the most-traded SHFE 2408 zinc contract opened at 24,735 yuan/mt, briefly dipping to 24,605 yuan/mt, then reaching a high of 24,790 yuan/mt, and finally closed at 24,690 yuan/mt, up 135 yuan/mt, an increase of 0.55%. Trading volume decreased to 62,408 lots, and open interest increased by 508 lots to 90,640 lots. Overnight, SHFE zinc recorded a bearish candlestick. The US economic data was lower than expected. Non-ferrous metals prices generally rose, with the center of SHFE zinc shifting upwards. SHFE zinc is expected to run strong today.

Tin
Last night, the most-traded SHFE tin contract closed at 275,800 yuan/mt, up 2,300 yuan/mt or 0.84%, with the highest at 277,780 yuan/mt and the lowest at 274,800 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 discounts of 400-500 yuan/mt over SHFE 2408 tin contract, versus discounts of 0-500 yuan/mt for delivery brands, premiums of 200-400 yuan/mt for Yunxi brand. Tin prices moved rangebound yesterday, leaving downstream companies on the sidelines. Overall, the spot market was relatively quiet yesterday. SHFE tin warrants decreased by 115 mt to 14,800 mt, while LME tin inventory decreased by 150 mt to 4,575 mt.
Nickel
On July 3, Jinchuan nickel was at a premium of 1,300-1,400 yuan/mt, with an average of 1,350 yuan/mt, down 100 yuan/mt from the previous trading day. Russian nickel was quoted at a discount of 0-400 yuan/mt, with an average of 200 yuan/mt, down 50 yuan/mt from the previous trading day. In the morning, the market fluctuated, and downstream purchasing willingness decreased. However, the shortage of electro-deposited nickel in the spot market continued, and the premiums and discounts of various brands remained firm. Nickel briquette prices were 134,900-135,100 yuan/mt, down 400 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 5,455 yuan/mt (nickel sulphate prices were 5,455 yuan/mt lower than nickel briquette prices).