SMM Morning Comment For SHFE Base Metals On August 2

Published: Aug 2, 2024 09:40

Source: SMM

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Overnight, LME copper opened at $9,112/mt.

SHANGHAI, August 2 (SMM) –

Copper

Overnight, LME copper opened at $9,112/mt. Initially, it moved higher amid fluctuations, reaching a session high of $9,185/mt. It then declined, hitting a session low of $8,986.5/mt at the end of the trading session. It slightly fluctuated around $9,210/mt before finally closing at $9,002.5/mt, down 2.57%. Trading volume reached 26,000 lots, and open interest was 290,000 lots. Overnight, the most-traded SHFE 2409 copper contract opened at 74,510 yuan/mt. Initially, it moved higher, reaching a session high of 74,840 yuan/mt. It then declined amid fluctuations, hitting a session low of 73,670 yuan/mt at the end of the trading session, and finally closed at 73,740 yuan/mt, down 1.61%. Trading volume reached 76,000 lots, and open interest was 183,000 lots. Macro-wise, despite the US Fed hinting at a possible rate cut in September, concerns about domestic demand persisted. Recent data shows that China's manufacturing data fell below the 50 mark, with July manufacturing data marking the first contraction in nine months, deepening market concerns and causing copper prices to decline further. Fundamentally, with the start of long-term orders in August, traders' demand for delivery has increased. Additionally, the implementation of the Fair Competition Review Regulations on August 1 has begun to show the substitution effect between copper cathode and copper scrap. Copper cathode social inventory continued to fall. As of Thursday, August 1, SMM copper stocks in major regions nationwide decreased by 2,800 mt from Monday to 348,400 mt, and by 9,100 mt from the previous Thursday, marking the fourth consecutive week of weekly destocking. Overall, the market is looking forward to the implementation of economic stimulus policies, and copper prices are expected to remain weak today.

Aluminum

Market: The most-traded SHFE 2409 aluminum contract opened at 19,230 yuan/mt overnight, reaching a high of 19,330 yuan/mt and a low of 19,225 yuan/mt, and closed at 19,225 yuan/mt, up 50 yuan/mt, an increase of 0.26%. The previous trading day, LME aluminum opened at $2,311/mt, reached a high of $2,327.5/mt and a low of $2,272.5/mt, and closed at $2,273.5/mt, down $41.5/mt, a decrease of 1.79%.

Summary: On the macro front, the Chinese government continues to boost the domestic economy, the expectation of a US Fed rate cut is increasing, and global liquidity is becoming more abundant. Together with the escalation of regional conflicts, these factors have led to a recent rebound in aluminium prices. However, on the fundamentals side, aluminium still shows a pattern of supply growth and weak demand, with social inventory at a high level for the same period. In the short term, the macro front and fundamentals will be intertwined with bullish and bearish factors, and aluminium prices are expected to fluctuate widely.

Lead

Overnight, LME lead opened at $2,100/mt. During the Asian session, it consolidated around the intraday moving average before weakening slightly. Entering the European session, it continued to fluctuate downward, hitting a low of $2,048/mt, and finally closed at $2,050.5/mt, down $49/mt, a decrease of 2.33%.

Overnight, the most-traded SHFE 2409 lead contract opened at 18,725 yuan/mt. After briefly touching 18,735 yuan/mt at the beginning of the session, some long funds exited, the price spread between the front-month and next-month contracts narrowed, and the squeeze atmosphere faded. The most-traded SHFE lead contract weakened all the way down, consolidating slightly under pressure at 18,350 yuan/mt, hitting a low of 18,270 yuan/mt, and finally closed at 18,305 yuan/mt, down 555 yuan/mt, a decrease of 2.94%.

Zinc

Overnight, LME zinc opened at $2,698.5/mt. At the beginning of the session, LME zinc quickly rose to a high of $2,724/mt, then fell back and continued to decline to a low of $2,649.5/mt. Subsequently, LME zinc rebounded, but after failing to reach a new high, it returned to run near the average daily line, finally closing lower at $2,680.5/mt, down $17.5/mt, a decrease of 0.65%. Trading volume reduced to 10,766 lots, and open interest decreased by 2,665 lots to 219,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 5-day moving average below forming support. LME zinc inventory decreased by 1,700 mt to 234,675 mt, a drop of 0.72%. The US July ISM Manufacturing PMI fell to 46.8, lower than expected, and initial jobless claims for the week rose to the highest level in nearly a year. Weak labor and economic data led LME zinc to first decline and then rise, maintaining a high level.

Overnight, the most-traded SHFE zinc 2409 contract opened at 22,845 yuan/mt. After the opening, SHFE zinc quickly rose to a high of 23,040 yuan/mt, then fell back below the average daily line due to long positions reducing, with a low of 22,830 yuan/mt during the period. It finally closed higher at 22,860 yuan/mt, up 75 yuan/mt, an increase of 0.33%. Trading volume reduced to 89,047 lots, and open interest decreased by 94 lots to 88,286 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the 10-day moving average below providing support. As of August 1, SMM domestic zinc ingot inventory decreased by 7,600 mt to 151,500 mt. The continued decline in domestic zinc ingot inventory provided some support for zinc prices, together with the pull of overseas futures prices, SHFE zinc swung on a strong note.

Tin

In the night session yesterday, the most-traded SHFE tin contract closed at 248,150 yuan/mt, down 2,530 yuan/mt, a decrease of 1.01%. The highest price was 250,660 yuan/mt, and the lowest was 247,380 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 500-1,500 yuan/mt over SHFE 2409 tin contract, versus premiums of 400-1,500 yuan/mt for delivery brands and premiums of 700-1,100 yuan/mt for Yunxi brand. Tin prices saw a slight decline yesterday, with most downstream producers still adopting a wait-and-see attitude, and few downstream producers restocked as needed. Overall, the spot market transactions were mediocre yesterday.

Nickel

On August 1, Jinchuan nickel was quoted at a premium of 1,400-1,800 yuan/mt, with an average of 1,600 yuan/mt, down 200 yuan/mt compared to the previous trading day. Norilsk nickel was quoted at a discount of 300 yuan/mt to a premium of 200 yuan/mt, with an average of 50 yuan/mt, flat compared to the previous trading day. In the morning, as the market rose sharply, spot premiums were generally adjusted downward. Nickel briquette prices were 130,600-130,800 yuan/mt, an increase of 1,100 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 4,336 yuan/mt (nickel sulphate prices were 4,336 yuan/mt lower than nickel briquette prices).

Market review

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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