SMM Morning Comment For SHFE Base Metals (August 18)

SHANGHAI, August 18 (SMM) -

Copper

Futures: LME copper opened at $9,754/mt last Friday night, initially fluctuating downward to test the low of $9,725/mt before gradually rebounding to touch a high of $9,808/mt, then fluctuating downward again to finally close at $9,759/mt, down 0.17%, with trading volume at 12,000 lots and open interest at 271,000 lots. The most-traded SHFE copper 2509 contract opened at 79,060 yuan/mt last Friday night, immediately testing the low of 78,900 yuan/mt before gradually rallying to touch a high of 79,290 yuan/mt, then fluctuating downward to finally close at 79,080 yuan/mt, up 0.15%, with trading volume at 13,000 lots and open interest at 150,000 lots.

Prices: Macro side, the meeting between Trump and Putin to promote the Russia-Ukraine ceasefire process reduced geopolitical risks, coupled with expectations for US Fed interest rate cuts in September supporting copper prices. However, Trump's proposed 300% tariff on chips and expanded steel and aluminum tariffs triggered trade policy uncertainties, capping gains. Supply side, domestic standard copper and imported copper supply remained ample, while high-quality copper resources such as Jinchuan were tight. Demand side, persistently high copper prices suppressed downstream purchasing sentiment, with weak demand performance. Overall, copper prices are expected to fluctuate rangebound today.

Aluminum

Futures: In the previous trading night session, the most-traded SHFE aluminum 2509 contract opened at 206,950 yuan/mt, reached a high of 207,000 yuan/mt, a low of 206,200 yuan/mt, and closed at 206,600 yuan/mt, down 0.53% from the previous close. LME aluminum opened at $2,621.5/mt, hit a high of $2,631.5/mt, a low of $2,592.5/mt, and closed at $2,603/mt, down 0.80%.

Summary: Overall, on the macro front, PBOC's Q2 2025 monetary policy report emphasized the continuation of moderately loose policies, focusing on price rebound and supply-demand balance; the US Trump administration announced an expansion of the 50% tariff on steel and aluminum imports. Amidst the off-season, aluminum prices fluctuated at highs, with relatively weak consumption recovery. Given the still ample supply, the trend of continued inventory buildup in the short term remains unchanged. Overall, domestic and overseas macro tailwinds coupled with potential supply risks in aluminum kept prices holding up well. However, inventory buildup pressure remained significant during the off-season. After the positive sentiment is digested, aluminum prices may face the risk of jumping initially and then pulling back. Subsequent attention should be paid to inventory and capital sentiment changes.

Lead

Last Friday, LME lead opened at $1,991.5/mt. During the Asian trading session, market activity was sluggish, with LME lead mostly fluctuating between $1,985-1,990/mt. In the European session, the US dollar index significantly declined, leading to a relative rebound in non-ferrous metals. LME lead attempted but failed to reach the $2,000/mt mark. During the night session, LME lead pulled back and finally closed at $1,981/mt, down 0.45%.

Last Friday, the most-traded SHFE lead 2509 contract opened at 16,810 yuan/mt. As expected, lead ingot inventory increased during the delivery period, and SHFE lead moved downwards after a higher opening. For the latter part of the session, it consolidated within the range of 16,775-16,800 yuan/mt, eventually closing at 16,780 yuan/mt, down 0.27%. Open interest stood at 50,401 lots, a decrease of 806 lots from the previous trading day.

Recently, the impact of environmental protection factors in Anhui has eased, and primary lead producers have largely resumed operations, resulting in relatively loose lead supply. However, the anticipated peak consumption season has not yet materialized, and lead inventories continue to show a slight upward trend. Lead prices are in the doldrums. In addition, news about overseas lead imports arriving in the country is frequent, but it has not yet been verified. Currently, only a limited amount of crude lead from Southeast Asia has entered the market, having a minimal impact on lead prices.

Zinc

Futures: On Friday, LME zinc opened at $2,843.5/mt, briefly rising to a high of $2,847/mt at the start of the session. Subsequently, with longs reducing positions, LME zinc fluctuated downward, hitting a low of $2,790/mt near the end of the session, and finally closed at $2,796.5/mt, down $46/mt or 1.62%. Trading volume increased to 10,973 lots, while open interest decreased by 2,725 lots to 191,000 lots. The most-traded SHFE zinc 2509 contract opened at 22,545 yuan/mt, quickly reaching a high of 22,580 yuan/mt at the beginning of the session. With shorts reducing positions and upward momentum weakening, the price center pulled back to a low of 22,465 yuan/mt, and finally closed at 22,505 yuan/mt, up 25 yuan/mt or 0.05%. Trading volume increased to 83,222 lots, while open interest decreased by 4,451 lots to 76,347 lots.

Zinc price forecast: Last Friday, LME zinc recorded a large bearish candlestick; US PPI increased unexpectedly, overseas funds took profits and exited, and macro expectations for interest rate cuts fluctuated, leading LME zinc to decline. Last Friday, SHFE zinc recorded a small bearish candlestick; under profit incentives, domestic smelting continued to expand, domestic inventory increased significantly, and with fluctuating macro sentiment, the center of SHFE zinc moved downward. It is expected that SHFE zinc will mainly consolidate today.

Tin

Last week, on the macro front, the US government negotiated with Intel to take a stake in the company, which could impact the global chip supply chain. Additionally, US Fed officials indicated that a significant interest rate cut next month might not be appropriate, leading to a cooling of market expectations for a rate cut. The domestic tin ore market showed a pattern of weak supply and demand. In terms of supply, tin ore supplies from major production areas such as Yunnan tightened, with some smelters planning maintenance or production cuts in August, providing some support to the supply side. On the demand side, after the installation rush in the PV sector ended, orders for PV tin bars in east China declined, while electronic end-users in south China entered the off-season. Coupled with high tin prices, there was a strong wait-and-see sentiment among end-users, with orders only meeting essential needs. Demand in other sectors like tinplate and chemicals remained stable without any unexpected growth. Spot market transactions were sluggish, with downstream solder companies being cautious about purchases. Traders attempted to refuse to budge on prices, but acceptance of higher prices was low, resulting in poor overall market transactions. Overall, it is expected that tin prices will maintain a fluctuating trend this week. Investors should closely monitor developments in domestic and overseas markets as well as policy changes, and operate with caution.