SMM Morning Comment For SHFE Base Metals (July 17)

SHANGHAI, July 17 (SMM) –

Copper

Futures market: Overnight, LME copper opened at $9,610/mt, fluctuating rangebound in early trading before hitting a low of $9,588/mt. It then surged sharply to a high of $9,664/mt before pulling back and rising again, ultimately closing at $9,637/mt, down 0.21%. Trading volume reached 17,000 lots, while open interest stood at 268,000 lots. Overnight, the most-traded SHFE copper 2508 contract opened at 77,810 yuan/mt, edged up slightly before retreating to a low of 77,770 yuan/mt. It then rallied sharply to a high of 78,090 yuan/mt before pulling back and climbing again to form an "M" pattern, eventually closing at 77,950 yuan/mt, up 0.01%. Trading volume reached 22,000 lots, while open interest stood at 158,000 lots.

Prices: Macro-wise, Trump denied rumors about firing Fed Chairman Powell while again criticizing Powell for failing to cut interest rates. The US dollar index plunged intraday and eventually closed lower, weighing on copper prices. Additionally, Trump stated he would send tariff letters to over 150 countries, with rates potentially set uniformly at 10% or 15%, further advancing his trade agenda, keeping tariff uncertainties alive. Fundamental-wise, standard-quality copper remained in tight supply, while some high-quality copper replenishments emerged. SX-EW copper stayed scarce, and warrants failed to flow out in large volumes during the delivery period, keeping overall supply tight. Demand side, suppliers continued to quote high premiums during the day, but SHFE copper fell in early trading, rebounding after a sustained decline in the morning session, with market sentiment affected by price fluctuations. Price-wise, current macro and fundamental bearish factors are causing disturbances, suggesting upward pressure on copper prices today.

Aluminum

Futures Market: On the previous trading day's night session, the most-traded SHFE aluminum 2509 contract opened at 20,415 yuan/mt, with a high of 20,450 yuan/mt, a low of 20,390 yuan/mt, and closed at 20,425 yuan/mt. Trading volume was 45,800 lots, and open interest was 260,000 lots. On the previous trading day, LME aluminum opened at $2,582/mt, with a high of $2,585.5/mt, a low of $2,562/mt, and closed at $2,575.5/mt.

Summary: Domestically, the macro-friendly tone persists. The US June PPI unexpectedly missed forecasts, dragged down by declining service prices, with businesses absorbing partial costs amid higher import tariffs—reflecting pressured domestic demand and squeezed profit margins. This reinforced concerns over the US economic outlook and signaled potential cooling in industrial and aluminum-consuming sectors (e.g., real estate, automobiles), indirectly dampening global aluminum demand expectations. Fundamentally, China’s aluminum operating capacity dipped slightly due to replacement projects, with the proportion of liquid aluminum dropping to 74.78% and ingot casting rising. Cost side, alumina price hikes recently pushed costs upward. Demand side, most downstream sectors remain mired in off-season sluggishness, with seasonally high aluminum prices further suppressing demand. Aluminum processing operating rates stayed sluggish. On July 17, mainstream consumption area aluminum ingot social inventory stood at 492,000 mt, down 9,000 mt from Monday but up 26,000 mt WoW, indicating short-term destocking amid an overall buildup trend. SMM expects aluminum prices to consolidate at highs, with inventory and demand dynamics warranting close monitoring.

Lead

Overnight, LME lead opened at $1,999/mt. During the Asian session, it remained under pressure and traded in the doldrums near the daily average. Entering the European session, it continued to decline, reaching a low of $1,974.5/mt, before finally closing at $1,978/mt, down $23/mt or 1.15%. Bulls continued to reduce their positions and exit the market, with LME lead recording five consecutive days of losses.

Overnight, the most-traded SHFE lead contract opened at 16,900 yuan/mt. After a slight initial rise to 16,935 yuan/mt, it corrected back to the daily average, fluctuating rangebound. Before the close, it weakened slightly, finally closing at 16,885 yuan/mt, down 10 yuan/mt or 0.06%.

Today's Lead Price Forecast:

In terms of supply during the peak season, after the continuous weakening of lead prices, the absolute prices of scrap batteries and lead concentrates have followed suit, slightly lowering the cost support below lead prices. Terminal consumption has not yet materialized. Before the implementation of August tariffs, battery orders exported to the US from various regions may be affected and decline. Domestic battery enterprises are cautious due to the fear of further price drops, preferring smelter sources for spot purchases. After the July delivery, there is still a slight increase in domestic lead ingot social inventory. After the short-term decline in lead prices, except for a few smelters that refused to budge on prices and held back sales or made pre-sales due to reasons such as a decline in supply, the subsequent rebound still requires support from the actual performance of downstream operations and end-use consumption. Lead prices may still continue to fluctuate and consolidate.

Zinc

Overnight, LME zinc opened at $2,702/mt. Subsequently, LME zinc briefly oscillated around the daily average line, before bulls reduced their positions, causing LME zinc to continuously decline below the daily average line. During this period, LME zinc attempted to rise above the daily average line but eventually faced resistance and pulled back, reaching a low of $2,676/mt. Entering the night session, LME zinc rapidly rose, touching a high of $2,715/mt, before slightly pulling back at the end of the session. It ultimately closed lower at $2,699.5/mt, down $2/mt or 0.07%. Trading volume decreased to 87,937 lots, while open interest decreased by 7,174 lots to 187,000 lots. Overnight, the most-traded SHFE zinc 2508 contract opened at 21,975 yuan/mt. After opening, SHFE zinc touched a low of 21,970 yuan/mt, before rapidly rising. However, bulls reduced their positions, causing SHFE zinc to continuously decline below the daily average line. Subsequently, bears reduced their positions, and SHFE zinc rose, touching a high of 22,120 yuan/mt. It ultimately closed higher at 22,100 yuan/mt, up 55 yuan/mt or 0.25%. Trading volume decreased to 37,483 lots, while open interest decreased by 5,592 lots to 72,719 lots.

Zinc Price Forecast: Overnight, LME zinc recorded a four-day losing streak, with the 5/20-day moving averages above exerting pressure and the lower Bollinger Bands providing support. Market sentiment fluctuated significantly due to rumors that Trump would fire Powell. The US dollar index plunged during the session, while the US PPI in June hit a new low since September 2024, causing the center of LME zinc to continue to decline. Overnight, SHFE zinc recorded a bullish candlestick, with the 5/20-day moving averages above exerting pressure and the lower Bollinger Bands providing support. The current expectation of a loose supply side in China continues, weakening the support for SHFE zinc. Meanwhile, downstream consumption is weakening. However, with significant macro uncertainties, SHFE zinc is expected to remain in the doldrums in the short term.

Tin

Futures: The most-traded SHFE tin contract (SN2508) opened lower in the night session and remained range-bound at low levels, settling near 262,000 yuan/mt, down 0.55% from the previous trading day.

Macro: (1) The State Council executive meeting emphasized standardizing competition in the NEV industry and ensuring automakers fulfill payment period commitments. It also stressed strengthening domestic circulation, implementing consumption stimulus measures, and optimizing the trade-in policy. (Bullish★) (2) Germany's Federal Motor Transport Authority (KBA) reported record H1 EV sales, accounting for nearly one-fifth of new car registrations, signaling accelerating demand after years of slow growth. (Bullish★) (3) Trade tariffs: ①Canada will tighten steel quotas for certain countries. ②Trump announced plans to notify over 150 small nations of universal tariff rates.

Fundamentals: (1) Supply disruptions: Tin ore supply tightens in major production areas like Yunnan, with some smelters likely maintaining maintenance or minor production cuts in July. (Bullish★) (2) Demand: PV sector: Post-installation rush, tin bar orders declined in east China, lowering operating rates at some producers. Electronics: South China's terminal end-users entered the off-season amid high tin prices, maintaining only essential orders with strong wait-and-see sentiment. Other sectors (tinplate, chemicals): Stable demand without exceeding expectations.

Spot market: Yunnan Tin traded at an 800–1,200 yuan/mt premium against the August contract, but downstream buyers only restocked minimally at lows. Most traders reported around 10 mt transactions, with a few achieving approximately one truckload, keeping the overall spot market sluggish.

Nickel:

Spot Market: On July 16, the SMM 1# refined nickel price was 120,800-123,400 yuan/mt, with an average price of 122,100 yuan/mt, up 1,700 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel was 1,900-2,100 yuan/mt, with an average premium of 2,000 yuan/mt, down 50 yuan/mt from the previous trading day. The spot premiums and discounts quotation range for electrodeposited nickel from domestic mainstream brands was -100-300 yuan/mt.

Futures Market: The most-traded SHFE nickel contract (2508) closed up 1.34% in the night session and continued its strength in the daytime session, hitting a high of 121,600 yuan/mt before pulling back. As of the midday session, SHFE nickel was quoted at 120,390 yuan/mt, up 0.78%. Macro factors dominate the direction, with a risk of downward movement in the price center. If tariffs are implemented or the US Fed delays interest rate cuts, SHFE nickel prices may fall further. In the short term, nickel prices may continue to be in the doldrums, with a core range of 118,000-123,000 yuan/mt.