SMM Morning Comment For SHFE Base Metals On July 12

SHANGHAI, July 12 (SMM) –
Copper
Overnight, LME copper opened at $9,866.5/mt, initially rose to $9,896.5/mt, then fluctuated downward, hitting a low of $9,764/mt at the end of the trading session, and finally closed at $9,777.5/mt, down 0.82%. Trading volume reached 19,000 lots, and open interest reached 333,000 lots.
Overnight, the most-traded SHFE copper 2408 contract opened at 79,780 yuan/mt, initially rose to 79,780 yuan/mt, then fell to 79,050 yuan/mt during the session, and finally consolidated at the end of the trading session, closing at 79,140 yuan/mt, up 1.09%. Trading volume reached 48,000 lots, and open interest reached 195,000 lots.

LME inventories continued to increase, accumulating to 207,000 mt as of Thursday, the highest since October 2021, raising market concerns about demand prospects and weighing on copper prices. Fundamentals side, with the upcoming futures deliveryk, market activity has decreased, and downstream stocking enthusiasm is not high. According to the SMM survey, as of Thursday, July 11, SMM copper stocks in major regions nationwide decreased by 9,400 mt from Monday to 388,600 mt, up 117,000 mt YoY. In the off-season for demand, copper prices are under pressure.
Aluminum
Overnight, the most-traded SHFE 2408 aluminum contract opened at 20,250 yuan/mt, with a high of 20,300 yuan/mt, a low of 20,130 yuan/mt, and closed at 20,160 yuan/mt, down 45 yuan/mt from the previous trading day, a decrease of 0.22%. The previous trading day, LME aluminum opened at $2,480/mt, with a high of $2,508.5/mt, a low of $2,474/mt, and closed at $2,474.5/mt, down $3.5/mt from the previous closing price, a decrease of 0.14%.

Summary: On the macro front, market expectations for a US Fed rate cut are continuously strengthening, and the upcoming 20th Third Plenary Session of the CPC Central Committee in China may bring positive news. On the fundamentals, domestic aluminium supply 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 hit, leading to a continuous decline in the operating rate of the aluminum processing industry and inventory accumulation in society. The aluminum market currently lacks driving factors, and in the short term, attention should be paid to the impact of macro changes on aluminum prices.
Lead
Overnight, LME lead opened at $2,180/mt. After a slight increase during the Asian session, it retreated. In the European session, LME lead rebounded and closed at $2,197/mt, up $19.5/mt, an increase of 0.9%.
Overnight, the most-traded SHFE lead 2408 contract opened at 19,555 yuan/mt. After briefly touching a high of 19,640 yuan/mt at the beginning of the session, it fell to a low of 19,485 yuan/mt. It then slightly rebounded and consolidated around the daily moving average, reaching a high of 19,520 yuan/mt before continuing to fluctuate downward, and finally closed at 19,540 yuan/mt, up 75 yuan/mt, an increase of 0.39%.

Zinc
Overnight, LME zinc opened at $2,956/mt, reaching a high of $3,003/mt before dropping to a low of $2,951.5/mt, and closed at $2,951.5/mt, down $5/mt, a decrease of 0.17%. Trading volume was reduced to 7,840 lots, and open interest increased by 477 lots to 239,000 lots. Overnight, LME zinc recorded a bearish candlestick. LME zinc inventory decreased by 1,750 mt to 253,300 mt, a decrease of 0.68%. The US June CPI data was lower than the previous value and expectations, with core CPI data turning negative for the first time in four years. The cooling inflation data continued to boost the US Fed rate cut expectations, causing the price center of LME zinc to slightly move upward.
Overnight, the most-traded SHFE 2409 zinc contract opened at 24,660 yuan/mt, reaching a high of 24,675 yuan/mt, then hitting a low of 24,345 yuan/mt, and closed at 24,355 yuan/mt, down 195 yuan/mt, a decrease of 0.79%. Trading volume was reduced to 43,108 lots, and open interest increased by 68 lots to 75,698 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 5-day moving average providing support below. In July, as smelters cut production, SMM zinc ingot social inventory increased again by 800 mt to 200,700 mt. The weak consumption trend continued, and poor demand dragged down the performance of SHFE zinc.
Tin
In yesterday's night session, the most-traded SHFE tin contract closed at 278,230 yuan/mt, down 3,900 yuan/mt, a decrease of 1.38%. The highest price was 284,820 yuan/mt, and the lowest was 278,020 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 for imported brand tin ingots. Yesterday morning, SHFE tin prices consolidated at high levels. Downstream producers were reluctant to purchase at 282,000 yuan/mt, with transactions only as needed. Overall, the spot market transactions were relatively sluggish yesterday.

Nickel
On July 11, Jinchuan nickel was at a premium of 1,100-1,300 yuan/mt, with an average of 1,200 yuan/mt, up 100 yuan/mt compared to the previous trading day. Russian nickel was at a discount of 0-200 yuan/mt, with an average of 100 yuan/mt, up 50 yuan/mt compared to the previous trading day. In the morning, the market fluctuated downward, but some traders reported that downstream buyers were more cautious, resulting in poor spot market transactions. Nickel briquette prices were 131,800-132,100 yuan/mt, down 1,100 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 2,405 yuan/mt (nickel sulphate prices were 2,405 yuan/mt lower than nickel briquette prices).