SMM Morning Comment For SHFE Base Metals On July 30

SHANGHAI, July 30 (SMM) –

Copper

LME copper opened at $9,076/mt overnight, initially reaching a high of $9,077/mt before hitting a low of $8,984/mt. By the end of the trading session, it had slightly rebounded, closing at $9,025/mt, down 0.53%. Trading volume reached 16,000 lots, and open interest was 289,000 lots. Overnight, the most-traded SHFE 2409 copper contract opened at 73,700 yuan/mt, initially experiencing slight fluctuations. It then moved slightly higher before hitting a session low of 73,470 yuan/mt. By the end of the session, it rebounded, reaching a high of 74,010 yuan/mt, and closed at 73,880 yuan/mt, up 0.63%. Trading volume reached 56,000 lots, and open interest was 174,000 lots. Macro side, the market is awaiting interest rate decisions from the US, UK, and Japan this week, which will provide further guidance. Currently, copper prices are pressured by weak demand and high inventories. Fundamentals side, as copper prices declined and the end of the month approaches, sellers held prices firm, resulting in low overall market activity. As of Monday, July 29, SMM copper stocks in major regions decreased by 6,300 mt from last Thursday to 351,200 mt, but total stocks were still 251,600 mt higher than 99,600 mt in the same period last year. Overall, high overseas inventories continued to suppress copper prices. Before the interest rate decisions from the three countries are announced, the market is expected to remain cautious, and copper prices are likely to stay at low levels.

Aluminum

Market: Overnight, the most-traded SHFE aluminum 2409 contract opened at 19,145 yuan/mt, reaching a high of 19,205 yuan/mt and a low of 19,090 yuan/mt, and closed at 19,140 yuan/mt, down 55 yuan/mt, a decrease of 0.29%. The previous trading day, LME aluminum opened at $2,287/mt, reached a high of $2,299/mt, a low of $2,239.5/mt, and closed at $2,247/mt, down $34/mt, a decrease of 1.49%.

Summary: On the macro side, global market liquidity is gradually increasing, and the outlook for regional conflicts remains uncertain. On the fundamentals side, domestic aluminum supply continues to grow, with a significant YoY increase in net imports of primary aluminum. Downstream aluminum processing and end-user demand have entered the off-season, with the operating rate in the aluminum processing industry hitting a low point, and the effects of some stimulus measures have yet to materialize. Social inventory is at a three-year high for the same period, and spot discounts persist. On the cost side, alumina prices face a risk of decline. In the short term, aluminum fundamentals continue to exert downward pressure on aluminum prices, while macro fluctuations are relatively significant. In the short term, it is crucial to focus on the impact of macro changes on aluminum prices.

Lead

Overnight, LME lead opened at $2,072.5/mt, consolidated around the daily moving average during the Asian session, briefly touched a high of $2,094/mt, and then retreated under pressure during the European session. LME lead fluctuated upward, reaching a high of $2,083.5/mt, and dipped to a low of $2,060/mt, down $13.5/mt, a decrease of 0.65%.

Overnight, the most-traded SHFE 2409 lead contract opened at 18,710 yuan/mt, initially fell to a low of 18,650 yuan/mt, then rebounded to a high of 18,760 yuan/mt, consolidated around the daily moving average, and finally closed at 18,745 yuan/mt, up 80 yuan/mt, an increase of 0.43%.

Zinc

Overnight, LME zinc opened at $2,679/mt. At the beginning of the session, LME zinc quickly rose to a high of $2,697.5/mt, then fluctuated downward, hitting a low of $2,631/mt near the end of the trading session, and finally closed lower at $2,639/mt, down $24/mt, a decrease of 0.9%. Trading volume increased to 9,226 lots, and open interest reduced by 2,360 lots to 217,000 lots. LME zinc inventory decreased by 1,800 mt to 240,550 mt, a drop of 0.74%. Overnight, LME zinc recorded a bearish candlestick, with the lower Bollinger Band providing support. The US dollar index rebounded from a low level, and market expectations for a rate cut in September were mostly digested, putting pressure on LME zinc's performance. Attention should be paid to subsequent US data releases.

Overnight, SHFE zinc 2409 contract opened at 22,705 yuan/mt. At the beginning of the session, SHFE zinc fluctuated around the average daily line, reaching a high of 22,760 yuan/mt. Subsequently, SHFE zinc fluctuated downward to a low of 22,545 yuan/mt. Bears reduced their positions, and SHFE zinc rebounded to near the average daily line, finally closing lower at 22,645 yuan/mt, down 145 yuan/mt, a decrease of 0.64%. Trading volume reduced to 68,392 lots, and open interest increased by 1,495 lots to 93,278 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 10-day moving average above forming resistance. Market concerns about zinc demand persisted during the consumption off-season. However, the supply-demand mismatch at the upstream mine still provided some support for zinc prices.

Tin

In the night session yesterday, the most-traded SHFE tin contract closed at 245,790 yuan/mt, down 1,860 yuan/mt, a decrease of 0.75%. The highest price was 246,800 yuan/mt, and the lowest was 244,000 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 premiums of 500-600 yuan/mt over SHFE 2408 tin contract, versus premiums of 800-1,400 yuan/mt for delivery brands, premiums of 1,200-1,600 yuan/mt for Yunxi brand. After a brief surge, SHFE tin prices fell back and remained in a low range during the morning session, with downstream purchasing enthusiasm somewhat diminished. Overall, the spot market transactions yesterday did not match the fervor of the previous week.

Nickel

On July 29, Jinchuan nickel was quoted at a premium of 2,000-2,200 yuan/mt, with an average of 2,100 yuan/mt, down 50 yuan/mt from the previous trading day. Norilsk nickel was quoted at a discount of 50 yuan/mt to a premium of 200 yuan/mt, with an average premium of 75 yuan/mt, flat compared to the previous trading day. In the morning, the market fluctuated downward, and spot premiums slightly decreased. Nickel briquette prices were 125,200-125,400 yuan/mt, down 850 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 3,109 yuan/mt (nickel sulphate prices were 3,109 yuan/mt higher than nickel briquette prices).