SMM Morning Comment For SHFE Base Metals (July 29)

SHANGHAI, July 29 (SMM) -

Copper

Futures market: Overnight, LME copper opened at $9,830.5/mt, initially touched a high of $9,856.5/mt, then fluctuated downward, nearing the session end to hit a low of $9,759/mt before a slight rebound to close at $9,796/mt, down 0.34%. Trading volume reached 12,000 lots, and open interest stood at 270,000 lots. Overnight, the most-traded SHFE copper 2509 contract opened at 79,130 yuan/mt, initially touched a high of 79,240 yuan/mt, fluctuated downward during the session to hit a low of 78,810 yuan/mt, then rebounded sharply to higher levels before consolidating sideways, finally closing at 79,010 yuan/mt, up 0.04%. Trading volume reached 33,000 lots, and open interest stood at 175,000 lots.

Prices: Macro-wise, the US-EU trade agreement boosted the US dollar and risk sentiment. Meanwhile, Trump continued pressuring Fed Chairman Powell to lower borrowing costs, though the market widely expects the US Fed to keep rates unchanged, weighing on copper prices. LME copper edged down slightly. On the supply side, domestic and imported arrivals were reported over the weekend, with additional domestic supply expected this week. Coupled with month-end supplier liquidation needs, overall supply remained ample. Demand side, downstream purchasing sentiment improved slightly as copper prices dipped during the day. Inventory-wise, as of July 28, SMM's mainstream copper inventories across China rose 6,100 mt WoW to 120,300 mt, with total inventories down 230,900 mt YoY from 351,200 mt, remaining at relatively low levels. Price-wise, the market awaits news on US trade agreements with multiple countries, expecting copper prices to fluctuate rangebound until then.

Aluminum

Futures Market: In the night session of the previous trading day, the most-traded SHFE aluminum 2509 contract opened at 20,635 yuan/mt, with a high of 20,695 yuan/mt, a low of 20,625 yuan/mt, and closed at 20,660 yuan/mt, up 0.22% from the previous close. LME aluminum opened at $2,637/mt, with a high of $2,642/mt, a low of $2,624/mt, and closed at $2,631/mt, unchanged from the previous close.

Summary: Overall, the US dollar index continued to rise by 1.01%. The newly reached US-EU trade agreement enhanced market risk appetite, supporting the US dollar's strength. However, the market continues to expect that the US Fed may initiate an interest rate cut in September. Domestically, policies related to "combating rat race competition" have driven up industrial metal prices, with the long-term tone of "promoting consumption and stabilizing growth" remaining unchanged. On the fundamental side, amidst the release of supply increments and the suppression of consumption during the off-season, expectations for inventory buildup remain strong. Additionally, recent market sentiment toward policies such as "anti-rat race competition" and "high-quality development" has cooled, with futures initially jumping and then pulling back. Short-term aluminum prices are expected to fluctuate at highs. Subsequent attention should focus on inventory and capital sentiment changes.

Lead

Overnight, LME lead opened at $2,020/mt. Trading in LME lead was sluggish during the Asian session, with prices basically consolidating between $2,015-2,020/mt. Entering the European session, LME lead gradually fluctuated upward. Especially after the decline in lead inventory, LME lead once again rose to $2,040/mt, but failed to hold above this level. By the end of the session, it had given up most of its gains, ultimately closing at $2,017.5/mt, down 0.15%, and recording three consecutive days of losses.

Overnight, the most-traded SHFE lead 2509 contract opened at 16,985 yuan/mt. In the early session, due to the ongoing regional tightness in domestic supply, the overall price center of SHFE lead shifted upward, touching the 17,000 yuan/mt mark. However, with the accumulation of lead warrant inventory and the commissioning of new secondary lead capacity, bullish momentum waned. In the latter half of the trading session, SHFE lead gave up some of its gains, ultimately closing at 16,945 yuan/mt, up 0.03%. Its open interest stood at 68,671 lots, a decrease of 1,875 lots from the previous trading day.

Recently, primary lead smelters have not fully recovered from maintenance, with supply remaining tight in some regions. The spot cargo shipments of primary lead smelters are limited, resulting in limited cargoes that can be delivered to social warehouses. Meanwhile, production at secondary lead smelters has gradually resumed. The SMM weekly operating rate of secondary lead smelters has been increasing in recent weeks, which has, to a certain extent, filled the supply gap and achieved a relative balance with lead consumption. From a price perspective, cargoes in Jiangsu, Zhejiang, and Shanghai warehouses are quoted at discounts of 30-0 yuan/mt against the SHFE lead 2509 contract for self pick-up, which is higher than the self-picked-up-from-production-site prices of lead smelters. Downstream enterprises prefer to purchase cargoes self-picked-up-from-production-site from lead smelters. Therefore, inventory changes in social warehouses have been relatively small, with a slight increase. In addition, maintenance at primary lead smelters is expected to end soon. Coupled with the resumption of production at secondary lead enterprises and the advancement of new capacity commissioning, if lead consumption does not significantly improve, it is not ruled out that social inventory of lead ingots will continue to accumulate, thereby dragging down lead prices.

Zinc

Futures Market: Overnight, LME zinc opened at $2,833.5/mt. Early in the session, LME zinc reached a high of $2,843.5/mt, then fluctuated downward, hitting a low of $2,803/mt during the session. Subsequently, LME zinc surged again above the daily average line. Near the end of the session, LME zinc pulled back again, closing at $2,805/mt, down $23.5/mt or 0.83%. Trading volume increased to 9,331 lots, while open interest decreased by 1,902 lots to 189,000 lots. Overnight, the most-traded SHFE zinc 2509 contract opened at 22,645 yuan/mt. Early in the session, SHFE zinc oscillated around the daily average line, reaching a high of 22,725 yuan/mt during the session. Then, SHFE zinc fluctuated downward slightly. Near the end of the session, it hit a low of 22,640 yuan/mt, closing at 22,665 yuan/mt, up 20 yuan/mt or 0.09%. Trading volume decreased to 52,677 lots, while open interest decreased by 113 lots to 124,000 lots.

Zinc Price Forecast: Overnight, LME zinc recorded a bearish candlestick, with the 10-day moving average providing support below. The US dollar index rose significantly, but the low LME zinc inventory still supported zinc prices. LME zinc consolidated and fluctuated. As a new round of China-US trade negotiations began, the market continued to await macro guidance. Overnight, SHFE zinc recorded a bullish candlestick, with the 20-day moving average providing support below. On Monday, SMM zinc ingot inventory continued to experience inventory buildup. The fundamentals provided weak support for zinc prices, but there were still positive macro expectations. SHFE zinc maintained a fluctuating trend.

Tin

Futures: The most-traded SHFE tin contract (SN2509) opened slightly higher in the night session but fluctuated downward, closing at 267,300 yuan/mt, down 0.51% from the previous trading day.

Macro: (1) The 2025 National Conference of Heads of Industrial and Information Technology Departments was held in Beijing, emphasizing the consolidation of comprehensive rectification results in the NEV sector's "rat race" competition, strengthening governance in key industries like PV, and using standard upgrades to phase out outdated capacity. The conference also stressed enhancing the mandatory national standard system in industrial and IT sectors. (2) According to Canalys' latest research, China's mainland smartphone market declined 4% YoY in Q2 2025 as the growth momentum from early-year state subsidies began to fade. Huawei regained the top position with shipments of 12.2 million units (18% market share), followed by vivo (11.8 million, 17%), OPPO (including OnePlus) at 10.7 million (16%), Xiaomi (10.4 million, fourth place with eight consecutive quarters of YoY growth), and Apple (10.1 million, fifth). (3) Tariffs: ① Bangladesh seeks Boeing aircraft purchases while negotiating US tariff reductions. ② South Korea proposes "Make American Shipbuilding Great Again" to expedite tariff agreements. ③ US Commerce Secretary Lutnick: The EU will pay 15% tariffs except for minor exemptions. Trump will review several agreements this week before finalizing rates. ④ Trump: Drug tariffs will be announced shortly; global tariffs likely at 15-20%. ⑤ Canadian PM: Trade talks with the US are at a critical stage. ⑥ Chile’s finance minister expects copper tariff exemptions.

Fundamentals: (1) Supply disruptions: Tin ore supply tightens in major production areas like Yunnan, with some smelters 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 for some producers. Electronics: South China’s electronics end-users entered the off-season amid high tin prices, sustaining only just-in-time procurement due to strong wait-and-see sentiment. Other sectors (e.g., tinplate, chemicals): Stable demand without exceeding expectations.

Spot market: The tin ingot spot market remained sluggish. Despite continuous price declines, overall levels stayed elevated, dampening purchasing enthusiasm among downstream and end-user enterprises, with most transactions limited to just-in-time procurement.