SMM Morning Comment For SHFE Base Metals (August 20)

SHANGHAI, August 20 (SMM) -

Copper

Futures: LME copper opened and hit a high of $9,747/mt overnight, then the price center gradually moved downward, approaching a low of $9,680/mt near the end of the session, and finally closed at $9,684.5/mt, down 0.69%. Trading volume reached 15,000 lots, and open interest reached 265,000 lots. Overnight, the most-traded SHFE copper 2509 contract opened at 78,690 yuan/mt, hit a high of 78,770 yuan/mt at the beginning of the session, then fluctuated downward, approaching a low of 78,510 yuan/mt near the end of the session, and finally closed at 78,550 yuan/mt.

Price: From a macro perspective, the US included 407 categories of steel and aluminum derivative products in the tariff list, and Treasury Secretary Besant is about to interview candidates for Fed Chairman, which triggered market concerns and jointly pressured copper prices. On the fundamental side, although the supply of high-quality copper remains limited, imported sources continue to supplement the market, putting pressure on the sales of mainstream brands, and the overall supply side appears slightly loose. On the demand side, the consumer market overall performed weakly, and insufficient end-use demand led to low purchase willingness among downstream enterprises. Overall, the uncertainty of macro policies, combined with the fundamental pattern of loose supply and weak demand, is expected to put pressure on copper prices today.

Aluminum

Futures: On Tuesday night, the most-traded SHFE aluminum 2510 contract opened at 20,540 yuan/mt, with the highest price at 20,540 yuan/mt, the lowest price at 20,480 yuan/mt, and closed at 20,490 yuan/mt. The trading volume was 45,800 lots, and the open interest was 234,000 lots. LME aluminum opened at $2,587/mt, reached a high of $2,587.5/mt, a low of $2,561/mt, and closed at $2,567.5/mt.

Summary: MIIT held a PV industry symposium, deploying measures to strengthen investment management of PV projects, promoting the orderly exit of outdated capacity through market-based and legal means. From a fundamental perspective, there were relatively small changes in terms of supply, with aluminum production slightly increasing. On the demand side, the September-October peak season is approaching, but currently, under the influence of the off-season, the consumption from end-users to processed materials is unlikely to exceed expectations. Growth in previously strongly supportive sectors such as home appliance and PV slowed down, and some aluminum end-user export orders also declined, while the construction sector continued to experience a sharper-than-seasonal downturn. Amid the off-season atmosphere, aluminum prices fluctuated at highs, consumption recovery remained relatively weak, and against the backdrop of ample supply, the short-term inventory buildup trend persisted. Overall, domestic and overseas macro tailwinds coupled with potential supply-side risks for aluminum kept prices holding up well. However, under the off-season pressure, inventory buildup remained a significant burden. Once the positive sentiment is digested, the price center of aluminum may face the risk of jumping initially and then pulling back, with the 21,000 yuan/mt level still under pressure. Subsequent attention should be paid to changes in inventory and capital sentiment.

Lead

Overnight, LME lead opened at $1,977/mt. During the Asian session, as the US dollar index weakened, LME lead fluctuated upward and approached $1,990/mt. However, entering the European session, LME lead gave back most of its gains. Especially after LME lead inventory surged by over 20,000 mt, the center of LME lead's price movement shifted further downward, reaching a low of $1,967.5/mt, hitting a new two-week low. It eventually closed at $1,974/mt, down 0.33%.

Overnight, the most-traded SHFE lead 2509 contract opened at 16,825 yuan/mt. Dragged down by the decline in LME lead, SHFE lead fell rapidly after the opening, reaching a low of 16,680 yuan/mt, a two-week low. In the latter half, the tug-of-war between longs and shorts intensified, with SHFE lead basically consolidating between 16,685-16,700 yuan/mt until it finally closed at 16,695 yuan/mt, down 0.68%. Its open interest reached 48,632 lots, an increase of 520 lots from the previous trading day.

Zinc

Futures: Overnight, LME zinc opened at $2,776.5/mt, mainly fluctuating around the daily moving average at the beginning of the session. During European trading hours, it rose to a high of $2,787/mt. Subsequently, with bulls reducing positions, LME zinc fluctuated downward, reaching a low of $2,761/mt during the night session, and finally closed down at $2,770/mt, a decrease of $14/mt or 0.5%. Trading volume dropped to 7,239 lots, and open interest decreased by 1,232 lots to 193,000 lots. The most-traded SHFE zinc 2510 contract opened at 22,215 yuan/mt, briefly rising to 22,275 yuan/mt at the start of the session. With bears increasing positions and insufficient upward momentum, the center pulled back to a low of 22,155 yuan/mt, and finally closed down at 22,180 yuan/mt, a decrease of 25 yuan/mt or 0.11%. Trading volume fell to 41,879 lots, and open interest increased by 2,745 lots to 10.8 lots.

Zinc price forecast: Overnight, LME zinc recorded a small bearish candlestick; for H1 2025, the production of major overseas zinc mines increased by over 12% YoY. The strengthening US dollar continued to put pressure on non-ferrous metals, and funds were cautious, leading to a slight decline in LME zinc, awaiting more macro guidance. Overnight, SHFE zinc also recorded a small bearish candlestick. Restrictions on vehicles below National V standards began in Tianjin, with small factories gradually halting operations. Consumption remained weak, and with fluctuating macro sentiment, the center of SHFE zinc moved downward. It is expected that SHFE zinc will mainly be in the doldrums today.

Tin

Futures: The most-traded SHFE tin contract (SN2509) rose slightly during the night session and then maintained a high-level sideways trend, closing at 268,800 yuan/mt, up 0.88% from the previous trading day.

Macro: (1) According to foreign media citing two sources, US Commerce Secretary Lutnick is studying federal government equity stakes in chip manufacturers building plants in the US under the CHIPS Act. This move extends the previous plan where the US intended to exchange cash subsidies for partial equity in Intel. A White House official and an informed source said that Lutnick is exploring how the US can acquire equity in companies like Micron Technology (MU.O), TSMC (TSM.N), and Samsung while providing them with CHIPS Act funds. Most of the funds have yet to be disbursed. (2) On August 19, Apple's iPhone 17 entered the mass production phase, with Foxconn, as the main toll processing producer for Apple's iPhones, initiating peak season recruitment at its Zhengzhou plant. (3) On Tuesday, Federal Reserve Vice Chair for Supervision Bowman suggested allowing Fed staff to hold small amounts of crypto assets, arguing that experience would help them better regulate these financial markets. Bowman stated that relaxing restrictions on employee investments could also aid in recruiting and retaining specialized bank examiners, and "minimal" holdings of cryptocurrencies and other digital assets would give employees practical knowledge of these products. "There is no substitute for firsthand experience in understanding the holding and transfer processes of crypto assets," she said in prepared remarks at a cryptocurrency conference in Wyoming. Bowman did not disclose specific details about the amount or type of holdings under consideration, but her comments further indicated a more friendly stance towards the cryptocurrency sector by regulators from the Trump administration.

Fundamentals: (1) Supply Disruptions: Overall tin ore supply in major producing areas such as Yunnan remains tight, with some smelters expected to maintain production cuts or undergo maintenance in August (Bullish ★). (2) Demand: PV Industry: After the installation rush, orders for PV solder bars in east China have declined, leading to a decrease in operating rates for some producers; Electronics Industry: In south China, electronic end-users are entering the off-season, coupled with high tin prices, resulting in a strong wait-and-see sentiment among end-users, with orders only maintaining just-in-time procurement; Other Sectors: Demand for tinplate, chemicals, and other sectors remains stable without any significant growth.

Spot Market: Spot market transactions remained mediocre yesterday, with some traders making deals of 10-20 mt, and a few trading over one truckload. Most downstream enterprises maintained a wait-and-see attitude, only engaging in just-in-time procurement.