SMM Morning Comment For SHFE Base Metals On July 8

SHANGHAI, July 8 (SMM) –
Copper
Last Friday night, LME copper opened at $9,940.5/mt, rose initially to a high of $10,000/mt, then fluctuated downward to a low of $9,929.5/mt, rebounded at the end of the trading session, and finally closed at $9,970/mt, with a gain of 0.85%. Trading volume reached 24,000 lots, and open interest reached 328,000 lots.
Last Friday night, the most-traded SHFE copper 2408 contract opened at 80,650 yuan/mt, initially touched a high of 80,800 yuan/mt, then fell to a low of 80,390 yuan/mt, consolidated at the end of the trading session, and finally closed at 80,640 yuan/mt, with a gain of 0.59%. Trading volume reached 41,000 lots, and open interest reached 199,000 lots.

Macro side, the US non-farm payrolls report further highlighted the cooling of the labour market, enhancing expectations of a US Fed rate cut in the coming months, and the US dollar index fell, which was bullish for copper prices. Fundamentals side, the rise in copper prices triggered market sentiment of fear of high prices, leading some downstream producers to increase their restocking, but as it is currently the off-season for consumption, the purchasing volume cannot sustain an increase. The continuous rise in copper prices is expected to hit market demand. Copper prices are expected to maintain high-level wide fluctuations.
Aluminum
Last Friday night, the most-traded SHFE aluminum 2408 contract opened at 20,400 yuan/mt, reached a high of 20,480 yuan/mt, a low of 20,365 yuan/mt, and closed at 20,415 yuan/mt, up 115 yuan/mt from the previous trading day, with a gain of 0.57%.
Last Friday, LME aluminum opened at $2,526.5/mt, reached a high of $2,557/mt, a low of $2,521.5/mt, and closed at $2,539.5/mt, up $12.5/mt from the previous closing price, with a gain of 0.49%.

Macro side, the US non-farm payrolls data further strengthened market expectations of a US Fed rate cut. Fundamentals side, domestic aluminum supply is increasing, with some capacity yet to be resumed. Downstream aluminum processing and end-user demand have entered the off-season, with operating rates declining. The aluminum market fundamentals lack driving factors, and short-term aluminum prices are expected to fluctuate. However, close attention should be paid to macro sentiment changes that may cause aluminum price volatility.
Lead
Last Friday night, LME lead opened at $2,226.5/mt, consolidated around the daily moving average during the Asian session, rose to $2,254/mt during the European session, and slightly pulled back before closing, finally closing at $2,241.5/mt, up $9.5/mt, with a gain of 0.43%.
Last Friday night, the most-traded SHFE lead 2408 contract opened at 19,755 yuan/mt, initially fell to a low of 19,570 yuan/mt, then rebounded and fluctuated upward to a high of 19,760 yuan/mt, and finally closed at 19,685 yuan/mt, down 10 yuan/mt, with a loss of 0.05%.

Zinc

Last Friday, LME zinc prices were $2,990.5/mt, dipping to $2,986.5/mt, then rising to a high of $3,022/mt, and finally closed at $3,000/mt, up $10/mt, an increase of 0.33%. Trading volume increased to 8,961 lots, and open interest was reduced by 2,201 lots to 233,000 lots. Last Friday, LME zinc recorded a bullish candlestick, with the upper Bollinger Band forming resistance. The US non-farm payrolls for June declined significantly compared to May, and the US unemployment rate for June unexpectedly rose to the highest level in two and a half years. The labour market cooled significantly, further strengthening market confidence in a rate cut, boosting LME zinc to continue running at high levels.
Last Friday, the most-traded 2408 SHFE zinc contract opened at 24,750 yuan/mt, dipping to 24,620 yuan/mt, then rising to a high of 24,765 yuan/mt, and finally closed at 24,675 yuan/mt, up 20 yuan/mt, an increase of 0.08%. Trading volume was reduced to 77,104 lots, and open interest increased by 1,386 lots to 88,928 lots. Last Friday, SHFE zinc recorded a bearish candlestick, with the 10-day moving average providing support below. Domestic and overseas zinc concentrate TCs continued to decline, providing bottom support for zinc prices. However, domestic consumption did not improve, and SHFE zinc remained in high-level fluctuations.
Tin
Last Friday night, the most-traded SHFE tin contract closed at 278,500 yuan/mt, up 2,430 yuan/mt, an increase of 0.88%.
Spot market transactions: During the morning session last Friday, traders' quotations for premiums and discounts of domestic tin ingot brands did not change much compared to recent days. Small brand tin ingot was at a discount of 400-500 yuan/mt against the 2408 contract, delivery brand was a discount of 0-500 yuan/mt against the 2408 contract, and Yunxi brand was at a premium of 200-400 yuan/mt over the 2408 contract. There were no quotations for imported tin brands. Last Friday morning, as SHFE tin prices fluctuated at high levels, most downstream producers adopted a wait-and-see stance, only purchasing a small amount for rigid demand. Most traders had sporadic transactions. Overall, the spot market transactions last Friday were relatively quiet.
Nickel
Last week, SHFE nickel prices continued to rise slightly, closing at 138,090 yuan/mt on Friday evening. The logic behind nickel prices has not changed significantly, and attention still needs to be paid to the impact of both macro factors and fundamentals. The rise in nickel prices last week can be attributed to two main points: First, LME strengthened restrictions on the delivery of Russian nickel, announcing a suspension on acceptance of refined nickel products from Norilsk Nickel PJSC's Harjavalta plant in Finland starting October 3. Second, domestic supply pressure eased temporarily due to increased exports. On the macro front, the Minutes released by the US Fed on July 3 indicated that the weak CPI in May supported the view of slowing inflation, but it would be inappropriate to cut rates before more clearly confirming that inflation is steadily moving towards the 2% target. Although Fed officials suggested a wait-and-see approach, they also acknowledged the slowdown in the US economy and the easing of price pressures. The PMI, labour market data, and trade data released on the same day were all lower than expected, further validating the trend of economic cooling and sparking rate cut expectations, attracting bulls into the market. Fundamentally, domestic spot supply remained limited. Driven by previous macro factors and the Indonesian RKAB incident, as well as the continued rise in the exchange rate of the dollar against RMB, overseas nickel prices have consistently been higher than domestic prices, prompting domestic refined nickel producers to continue exporting nickel plates. In summary, although the long-term expectation of oversupply remains unchanged, SHFE nickel prices have limited downward room in the short term, supported by improving SHFE/LME nickel price ratio and the fact that macro environment has not shifted obviously. It is expected that the most-traded SHFE nickel contract will reach 135,000-145,000 yuan/mt this week.