SMM Morning Comment For SHFE Base Metals On July 11

Published: Jul 11, 2024 09:51

Source: SMM

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Overnight, LME copper opened at $9,822.5/mt, dipped lower than $9,822.5/mt, then fluctuated upwards to a high of $9,933/mt, before falling back at the end of the trading session to close at $9,858/mt, down 0.17%.

SHANGHAI, July 11 (SMM) –
Copper
Overnight, LME copper opened at $9,822.5/mt, dipped lower than $9,822.5/mt, then fluctuated upwards to a high of $9,933/mt, before falling back at the end of the trading session to close at $9,858/mt, down 0.17%. Trading volume reached 16,000 lots, and open interest reached 333,000 lots.
Overnight, the most-traded SHFE copper 2408 contract opened at 79,970 yuan/mt, hit a high of 80,280 yuan/mt at the beginning of the session, fluctuated widely during the session, and fell back to a low of 79,920 yuan/mt at the end of the session, finally closing at 80,020 yuan/mt, up 0.19%. Trading volume reached 32,000 lots, and open interest reached 195,000 lots.

Macro side, as Powell did not dampen market expectations of a rate cut, the US dollar index declined, which was bullish for copper prices. Additionally, the continuously decreasing COMEX inventories also raised market concerns. Fundamentals, copper price was lower than the previous day, with some downstream producers seizing the opportunity to restock, leading to an increase in procurement, though the increase was limited. The market is awaiting the upcoming US CPI data, and it is expected that the center of copper prices will not change significantly.
Aluminum
Overnight, the most-traded SHFE 2408 aluminum contract opened at 20,140 yuan/mt, reached a high of 20,265 yuan/mt, a low of 20,140 yuan/mt, and closed at 20,170 yuan/mt, up 70 yuan/mt from the previous trading day, an increase of 0.35%. The previous trading day, LME aluminum opened at $2,495.5/mt, reached a high of $2,501.5/mt, a low of $2,476.5/mt, and closed at $2,478/mt, down $19/mt from the previous trading day's closing price, a decrease of 0.76%.
Summary: On the macro front, US inflation pressure decreased, and the US Fed's rate cut expectations strengthened. On the fundamentals, domestic aluminum production is increasing, with some capacity still awaiting resumption. Downstream aluminum processing and end-user demand have entered the off-season, with demand in some sectors being impacted, leading to a continuous decline in the operating rate of the aluminum processing industry and inventory growth in social stocks. The aluminum market currently lacks driving factors, and aluminum prices are expected to fluctuate in the short term. However, attention should be paid to changes in macro sentiment that may cause aluminum price fluctuations.
Lead
Overnight, LME lead opened at $2,195/mt, and continued its downward trend, hitting a low of $2,175.5/mt, and closed at $2,177.5/mt, down $17.5/mt, a decrease of 0.8%.
Overnight, the most-traded SHFE 2408 lead contract opened at 19,455 yuan/mt. After reaching a high of 19,520 yuan/mt at the beginning of the session, it fluctuated downward and closed at 19,370 yuan/mt, down 110 yuan/mt, a decrease of 0.56%.
Zinc
Overnight, LME zinc opened at $2,939/mt, falling to a low of $2,912/mt, then reaching a high of $2,974/mt, and closed at $2,956.5/mt, up $16.5/mt, or 0.56%. Trading volume increased to 7,887 lots, and open interest was reduced by 689 lots to 238,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the 20-day moving average providing support below. LME zinc inventory decreased by 1,325 mt to 255,050 mt, a drop of 0.52%. Remarks by US Fed official Powell strengthened market expectations for a US interest rate cut, causing the US dollar index to fall and boosting the rebound in LME zinc.

Overnight, the most-traded SHFE 2409 zinc contract opened at 24,250 yuan/mt, dipping to 24,245 yuan/mt, then slowly climbing to a high of 24,445 yuan/mt, and closed at 24,390 yuan/mt, up 225 yuan/mt, or 0.93%. Trading volume decreased to 32,705 lots, and open interest increased by 594 lots to 74,863 lots. Overnight, the most-traded SHFE zinc contract recorded a bullish candlestick, with the 20-day moving average forming resistance above. The positive macro sentiment in overseas futures boosted the higher opening price of SHFE zinc. However, weak domestic spot consumption during the off-season dragged down the upward trend of SHFE zinc. Attention should be paid to the subsequent performance of domestic zinc ingot inventory.
Tin
In the night trading session yesterday, the most-traded SHFE tin contract closed at 282,580 yuan/mt, up 4,390 yuan/mt, an increase of 1.58%. The highest price was 283,000 yuan/mt, and the lowest was 279,500 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, and discounts of 600 yuan/mt imported brand tin ingots. SHFE tin prices surged and then fell back during the morning session yesterday, and downstream producers' willingness to purchase remained sluggish. Overall, the spot market was relatively quiet yesterday. SHFE tin warrants decreased by 18 mt to 14,793 mt, while LME tin inventory decreased by 150 mt to 4,600 mt.
Nickel
On July 10, Jinchuan nickel was at a premium of 1,000-1,200 yuan/mt, with an average of 1,100 yuan/mt, up 200 yuan/mt compared to the previous trading day. Russian nickel was at a discount of 0-300 yuan/mt, with an average of 150 yuan/mt, up 100 yuan/mt compared to the previous trading day. In the morning, as the market fluctuated downward, downstream purchasing sentiment resumed, and some traders reported active spot transactions. The price of nickel briquette was 132,950-133,150 yuan/mt, down 2,850 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 3,505 yuan/mt (nickel sulphate prices were 3,505 yuan/mt lower than nickel briquette prices).

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