SHANGHAI, Aug 30 (SMM) –
Copper
US Economic Data Exceeds Expectations, Copper Prices Decline Overnight [SMM Morning Comment]
SMM, August 30: Overnight, LME copper opened at $9,219/mt, fluctuated rangebound initially, then dipped to $9,210/mt. It experienced wide fluctuations during the session, reaching a high of $9,306/mt near the close, and finally settled at $9,272/mt, up 0.36%. Trading volume reached 17,000 lots, and open interest was 285,000 lots. The most-traded SHFE copper 2410 contract opened at 73,820 yuan/mt, dipped to 73,550 yuan/mt initially, fluctuated rangebound during the session, and climbed to a high of 74,210 yuan/mt near the close, finally settling at 74,110 yuan/mt, down 0.09%. Trading volume reached 50,000 lots, and open interest was 164,000 lots.
Macro-wise, the initial jobless claims in the US recorded 231,000 last week, slightly below expectations. The revised annualized QoQ GDP growth rate for Q2 was 3%, better than market expectations. Following the release of strong US economic data, the US dollar index continued its previous day's rise, which was bearish for copper prices.
Fundamentally, on the supply side, the arrivals of imported copper were abundant this week, and traders were actively selling, increasing the supply of copper cathode in the spot market. On the demand side, as copper prices fell, downstream purchasing increased, and overall trading was good. However, the market still needs to monitor the subsequent copper price trends. According to the SMM survey, as of Thursday, August 29, copper stocks in major regions across China decreased by 4,000 mt from Monday to 279,000 mt, and also decreased by 4,000 mt compared to last Thursday, marking the eighth consecutive week of weekly destocking, although the destocking speed has slowed. Total stocks were 190,000 mt higher YoY compared to 89,000 mt last year. In terms of prices, the downside space for copper prices is expected to be limited.
Aluminum
The process of destocking aluminum ingots has been hindered again, and SHFE aluminum fluctuated downward [SMM Aluminum Morning Comment]
Overnight, the most-traded SHFE aluminum 2410 contract opened at 19,660 yuan/mt, hit a high of 19,705 yuan/mt, a low of 19,625 yuan/mt, and closed at 19,655 yuan/mt, down 55 yuan/mt from the previous close, a decrease of 0.28%. On Thursday, LME aluminum opened at a high of $2,486.5/mt, a low of $2,450/mt, and closed at $2,466/mt, down $18/mt, a decrease of 0.72%.
Summary: On the macro front, the market has gradually digested expectations for the US Fed to ease policy next month. The market is currently focusing on Friday's Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation indicator, which may provide more clues on the rate cut in September and the pace of future easing cycles. On the fundamentals, the domestic aluminum supply side remains stable in the short term, and recent disturbances such as power rationing have not had a substantial impact on aluminum production. Downstream demand is in a slow recovery phase but still requires more end-user demand to see a significant improvement. In the short term, with the fading of favourable macro sentiment and lower-than-expected destocking on the fundamentals, bulls' confidence is insufficient, and aluminum prices are expected to maintain a fluctuating trend. Continuous attention should be paid to macro changes and the progress of the peak consumption season for end-users.
Lead
Shorts Increased Positions, Domestic and Foreign Lead Prices Both Fell [SMM Lead Morning Comment]
SMM, August 30: Overnight, LME lead opened at $2,071/mt. During the Asian session, it fluctuated upwards to $2,080.5/mt. Due to weak demand, LME lead fluctuated downwards during the European session, hitting a low of $2,032.5/mt at the end of the session and closing at $2,042/mt, a decrease of 1.38%. Overnight, the most-traded SHFE lead 2410 contract opened lower at 17,380 yuan/mt. At the beginning of the session, shorts increased positions, causing SHFE lead to drop to 17,195 yuan/mt. After hitting the low, it rebounded and recovered most of the losses, closing at 17,340 yuan/mt, a decrease of 0.34%.
Zinc
LME zinc slightly dipped, focus on core PCE price index tonight [SMM Zinc Morning Comment]
Overnight, U.S. initial jobless claims and GDP data showed a strong economy; Iraq plans to cut oil loading starting in September; Libya is reportedly halting oil loading at five export terminals; the Japanese government raised its economic outlook for the first time in 15 months; Xi Jinping met with U.S. National Security Advisor Sullivan; the PBOC purchased 400 billion yuan of special government bonds; offshore yuan broke through the 7.1 mark against the dollar.
Overnight, LME zinc opened at $2,872/mt. At the beginning of the session, bears had the upper hand, pushing LME zinc down to $2,856/mt. Subsequently, bulls entered at the low, driving LME zinc up in steps, reaching a high of $2,905/mt during European trading hours. Later, as bears entered and bulls closed positions, LME zinc's center of gravity shifted down to near the daily moving average. It attempted to break above but failed, returning to near the daily moving average, and finally closed up at $2,885.5/mt, up $13/mt, or 0.45%. Trading volume decreased to 9,061 lots, and open interest increased by 3,814 lots to 223,000 lots. Overnight, LME zinc recorded a small bearish candlestick, with the 5-day moving average forming resistance above and the 10-day moving average forming support below. Overnight, LME zinc inventory decreased by 3,300 mt to 246,325 mt, a drop of 1.32%, marking another reduction in LME inventory. Strong U.S. employment data indicated the resilience of U.S. economic data, with LME zinc operating at high levels. Today, focus on the U.S. July core PCE price index.
Overnight, the most-traded SHFE zinc 2410 contract opened lower at 23,995 yuan/mt. At the beginning of the session, SHFE zinc briefly consolidated around the daily moving average before bears increased positions, pushing SHFE zinc down to 23,925 yuan/mt. Subsequently, as bears took profits and exited, SHFE zinc corrected upwards, with its center of gravity shifting above the daily moving average. At the end of the session, bulls increased positions, driving SHFE zinc up quickly, with its center of gravity shifting to around 24,050 yuan/mt, reaching a high of 24,070 yuan/mt during the period, and finally closed up at 24,050 yuan/mt, up 35 yuan/mt, or 0.15%. Trading volume decreased to 75,015 lots, and open interest decreased by 357 lots to 123,000 lots. Overnight, SHFE zinc recorded a small bullish candlestick, with the 5-day moving average forming resistance above and the MACD bullish candlestick narrowing. As ferrous metal prices stabilized, galvanized production slightly improved, and social inventory continued to deplete amid reduced supply, supporting zinc prices to move at high levels.
Tin
SHFE Tin Prices Rebounded After Bottoming Out in Night Trading, Downstream Enterprises Became More Cautious [SMM Tin Morning Comment]
SMM, August 30: In yesterday's night trading session, the most-traded SHFE tin contract closed at 263,160 yuan/mt, down 460 yuan/mt, a decrease of 0.17%, with a high of 263,800 yuan/mt and a low of 260,900 yuan/mt. During yesterday's morning session, the quotes from trading companies for various domestic tin ingot brands showed little change compared to recent days. Small brand tin ingots were quoted at par with the SHFE 2409 contract, delivery brand prices ranged from par to a premium of 700 yuan/mt over the SHFE 2409 contract, Yunnan Tin brand was quoted at a premium of 700-900 yuan/mt over the SHFE 2409 contract, and imported tin brands were quoted at par with the SHFE 2409 contract. Yesterday, tin prices rebounded after bottoming out, with some downstream enterprises choosing to wait and see, while others made small restocking purchases. Some trading companies had sporadic transactions, and a few trading companies completed 2-3 truckloads of transactions. Overall, the spot market transactions were relatively mixed yesterday.
Nickel
On August 29, Jinchuan premiums were quoted at 1,000-1,100 yuan/mt, with an average premium of 1,050 yuan/mt, remaining flat compared to the previous trading day. Russian nickel premiums were quoted at -400 to 100 yuan/mt, with an average premium of -150 yuan/mt, also remaining flat compared to the previous trading day. Yesterday morning, the market gave back some of the gains from the previous night, but the spot market premiums fluctuated slightly compared to the previous working day. Yesterday, nickel briquette prices were 129,300-129,500 yuan/mt, down 400 yuan/mt from the previous trading day's spot price. Today, the price spread between nickel briquette and nickel sulphate was about 1,445 yuan/mt (nickel sulphate prices were 1,445 yuan/mt lower than nickel briquette prices).
