SMM Morning Comment For SHFE Base Metals (July 25)

SHANGHAI, July 25 (SMM) -

Copper

Futures market: LME copper opened at $9,940/mt (the session high) overnight, then fluctuated downward with the price center gradually declining to touch a low of $9,848/mt before closing at $9,854.5/mt after considerable fluctuations, down 0.8%. Trading volume reached 14,000 lots, and open interest stood at 267,000 lots. The most-traded SHFE copper 2509 contract opened at 79,520 yuan/mt overnight, initially fluctuating downward to hit a low of 79,180 yuan/mt before rebounding to a high of 79,550 yuan/mt, then closing at 79,290 yuan/mt after fluctuating downward, down 0.69%. Trading volume reached 39,000 lots, and open interest stood at 177,000 lots.

Prices: Macro-wise, the EU's $93 billion retaliatory tariff list against the US may take effect on August 7, and uncertainties remain in India-US and India-UK trade negotiations, exacerbating market risk-off sentiment. Escalating Thailand-Cambodia conflicts led to Thai airstrikes on Cambodia, pushing up the overnight US dollar index. Political turmoil over the US Fed's interest rate cuts continued to unsettle markets. Fundamentally, supply and demand both weakened, with reduced import and smelting arrivals causing mainstream national inventories to drop by 4,400 mt to 114,200 mt. Demand side, high copper prices suppressed downstream procurement sentiment, weakening demand. With unresolved trade frictions and geopolitical risks, copper prices are expected to encounter resistance today.

Aluminum

Futures Market: On the previous trading day's night session, the most-traded SHFE aluminum 2509 contract opened at 20,760 yuan/mt, with a high of 20,810 yuan/mt, a low of 20,730 yuan/mt, and closed at 20,755 yuan/mt, down 0.02% from the previous close. LME aluminum opened at $2,642.0/mt, with a high of $2,664.5/mt, a low of $2,637.5/mt, and closed at $2,646.0/mt, up 0.27%.

Summary: Overall, on the macro front, overseas tariffs have been successively confirmed and are lower than earlier estimates, reducing uncertainty risks and benefiting overseas demand recovery. Domestically, policies against "rat race" competition have driven up industrial metals, while the long-term tone of "promoting consumption and stabilizing growth" remains unchanged. Fundamentally, with supply increments being released and the off-season suppressing consumption, expectations of inventory buildup remain strong. Additionally, recent market sentiment toward policies such as "anti-rat race" and "high-quality development" has cooled, leading the futures market to jump initially and then pull back. In the short term, aluminum prices are expected to fluctuate at highs. Going forward, attention should be paid to inventory and capital sentiment changes.

Lead

Overnight, LME lead opened at $2,029/mt, consolidating in a range during the Asian session. After entering the European session, it surged to $2,042/mt. However, due to an increase in bearish positions, LME lead jumped initially and then pulled back, reaching a low of $2,018/mt in the tail end of the session. It eventually closed at $2,023/mt, down by 0.27%.

Overnight, the most-traded SHFE lead 2509 contract opened at 16,890 yuan/mt, briefly touching a high of 16,940 yuan/mt in the early session. Affected by factors such as the accumulation of social inventory of lead ingots and weak downstream consumption, SHFE lead fluctuated downward, reaching a low of 16,850 yuan/mt. It eventually closed at 16,865 yuan/mt, down by 0.15%.

The impact of maintenance at some primary lead enterprises has not yet been fully lifted, and the losses of secondary lead have not improved temporarily. Secondary lead smelters are not highly motivated to produce, and their quotations remain firm, with premiums ranging from 0 to 100 yuan/mt against the SMM #1 lead average price. As the quotations of primary lead (electrolytic lead) in major production areas range from a discount of 20 yuan/mt to a premium of 50 yuan/mt against the SMM #1 lead price, the price advantage of secondary lead has declined, causing downstream enterprises' rigid demand to flow towards primary lead. Additionally, the raw material supply situation has not improved temporarily. Considering the lead ingot supply situation, lead prices still have support in the short term.

Zinc

Futures Market: Overnight, LME zinc opened at $2,860/mt. Initially, LME zinc fluctuated along the daily average line. During European trading hours, it reached a high of $2,880/mt. As the night session approached, bears launched a high-level attack on LME zinc, causing it to decline continuously. The center of gravity moved down to $2,840/mt by the end of the session. It closed at $2,840.5/mt, down $19.5/mt or 0.68%. Trading volume decreased to 10,673 lots, while open interest increased by 327 lots to 188,000 lots. Overnight, the most-traded SHFE zinc 2509 contract opened lower with a gap at 22,850 yuan/mt. Initially, SHFE zinc traded below the daily average line, with the center of gravity fluctuating near 22,810 yuan/mt. It attempted to break above but failed. It closed at 22,810 yuan/mt, down 120 yuan/mt or 0.52%. Trading volume decreased to 8,423 lots, while open interest decreased by 1,883 lots to 37,024 lots.

Zinc Price Forecast: Overnight, LME zinc stopped rising and started to fall, with the KDJ indicator narrowing. Overnight, LME zinc inventory increased, coupled with bears entering the market at high levels, causing the center of LME zinc to slightly decline. Overnight, SHFE zinc recorded a small bearish candlestick, with the 5-day moving average acting as resistance. Overnight, iron ore and alumina showed a strong trend, while optimism in other metal markets faded. Meanwhile, social inventory of zinc and weekly inventory at smelters both increased, causing the center of zinc price to move downward. Attention should be paid to the Sino-US trade negotiations next week.

Tin

Futures: The most-traded SHFE tin contract (SN2508) opened slightly lower in the night session and fluctuated within a downward-shifted range, closing at 271,400 yuan/mt, down 0.83% from the previous trading day.

Macro: (1) During his Thursday visit to the US Fed building, President Trump stated he had a "good conversation" with Fed Chairman Powell, describing the discussion atmosphere as non-confrontational. Trump mentioned discussing interest rates with Powell and dismissed the idea of firing him as unnecessary. (2) Tariffs—①The EU approved a 93 billion euro retaliatory tariff plan against the US, which will take effect on August 7 if no agreement is reached. ②India's Commerce Minister expressed confidence in reaching a trade deal with the US. ③India signed a free trade agreement with the UK.

Fundamentals: (1) Supply-side disruptions: Tin ore supply tightened in major production regions like Yunnan, with some smelters likely maintaining maintenance shutdowns or minor production cuts in July (Bullish★). (2) Demand-side: PV sector—Orders for tin bars in east China declined post-installation rush, leading to lower operating rates at some producers. Electronics sector—End-users in south China entered the off-season amid high tin prices, resulting in strong wait-and-see sentiment and only essential orders. Other sectors—Steady demand for tinplate and chemical applications without exceeding expectations.

Spot market: Spot transactions stalled yesterday due to high price consolidation, with most traders reporting no deals and only a few concluding minimal essential-volume trades.