SMM Morning Comment For SHFE Base Metals (August 21)

SHANGHAI, August 21 (SMM) -

Copper

Futures: LME copper opened at $9,679.5/mt overnight, fluctuated rangebound at $9,670.5/mt in early trading, then the center of copper prices gradually moved upward to a high of $9,712/mt, and finally closed at $9,721/mt, up 0.38%, with trading volume reaching 14,000 lots and open interest reaching 263,000 lots. The most-traded SHFE copper 2509 contract opened at 78,560 yuan/mt overnight, fluctuated downward to a low of 78,480 yuan/mt in early trading, then fluctuated upward all the way to a high of 78,800 yuan/mt near the end of the session, and finally closed at 78,730 yuan/mt, up 0.19%, with trading volume reaching 16,000 lots and open interest reaching 132,000 lots.

Price: Macro front, policy divergence within the US Fed emerged. Although the July meeting kept interest rates unchanged, a minority of officials supported an interest rate cut in September. Meanwhile, geopolitical risks persisted, with Israel not responding to the ceasefire proposal and continuing military operations, and Russia strongly opposing NATO troops in Ukraine. The market awaited news from Ukraine talks. A rebound in crude oil and strengthened expectations for US Fed interest rate cuts provided positive support for copper prices. Fundamentals: Supply side, increased arrivals at domestic smelters have shifted the spot supply landscape for copper cathode from previously tight to clearly loose. Demand side, the traditional off-season persists, with downstream players maintaining purchasing as needed and restocking moderately at lows, overall sentiment remains cautious. In summary, positive macro developments provide some support for copper prices at lower levels.

Aluminum

Futures: In the night session of the previous trading day, the most-traded SHFE aluminum 2510 contract opened at 20,570 yuan/mt, reached a high of 20,590 yuan/mt, a low of 20,535 yuan/mt, and closed at 20,565 yuan/mt, up 0.15% from the previous close. LME aluminum opened at $2,569/mt, hit a high of $2,584.5/mt, a low of $2,558/mt, and closed at $2,577/mt, with a gain of 0.37%.

Summary: From a fundamental perspective, there have been no significant changes in terms of supply, with aluminum production steadily increasing. On the demand side, although the September-October peak season is approaching, the impact of the current off-season makes it difficult for terminal to semi-finished product consumption to exceed expectations. Industries such as home appliances and PV, which previously showed strong support, are experiencing a slowdown in growth, and some aluminum end-user export orders have also declined. The construction industry remains in an ultra-seasonal downturn. In the off-season atmosphere, aluminum prices fluctuated at highs, with consumption recovery remaining relatively weak. Against the backdrop of ample supply, the short-term inventory buildup trend continued unabated. Overall, domestic and overseas macro tailwinds, coupled with potential risks in aluminum supply, kept aluminum prices holding up well. However, amid the consumption off-season, inventory buildup pressure remained significant. 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 $1,972.5/mt. During the Asian session, LME lead was in the doldrums, fluctuating between $1,965-1,970/mt, with the lowest point reaching $1,965/mt, refreshing a two-week low. Entering the European session, the US dollar index rose and then pulled back, allowing LME lead to stop falling and rebound, regaining the $1,980 level, and finally closing at $1,980/mt, up 0.33%, largely recovering the losses from the previous trading day.

Overnight, the most-traded SHFE lead 2509 contract opened at 16,770 yuan/mt. The decline in SHFE lead warrant inventory alleviated market bearish sentiment, while secondary lead cost support remained strong. SHFE lead gradually stopped falling and rebounded, approaching 16,800 yuan/mt, and finally closed at 16,780 yuan/mt, up 0.3%. Open interest reached 46,592 lots, down 184 lots from the previous trading day.

Recently, the General Administration of Customs has successively released July import and export data, which showed lead-acid battery exports at 21.2866 million units, up 13.56% MoM, boosting lead consumption. Meanwhile, the total imports of refined lead and lead materials in July were 16,300 mt, up 42.10% MoM. Both imports and exports increased, with the supply-demand pattern of the lead ingot market relatively balanced. In addition, the recent decline in lead prices has further widened the losses for secondary lead enterprises, dampening their enthusiasm for production and shipments. The inverted price relationship between secondary and primary lead may play a supportive role, leading to expectations that lead prices will stop falling and stabilize.

Zinc

Futures: Overnight, LME zinc opened at $2,770.5/mt. At the beginning of the session, LME zinc briefly dipped to $2,766/mt, then mainly fluctuated around the daily moving average. Subsequently, as shorts reduced their positions, LME zinc fluctuated upward, reaching a high of $2,791.5/mt during the night session, and finally closed up at $2,786/mt, an increase of $16/mt or 0.58%. Trading volume decreased to 5,765 lots, and open interest fell by 1,495 lots to 191,000 lots. The most-traded SHFE zinc 2510 contract opened at 22,300 yuan/mt. It briefly rose to 22,330 yuan/mt at the start of the session, but then lacked upward momentum, with the center pulling back to 22,245 yuan/mt. It finally closed up at 22,300 yuan/mt, an increase of 35 yuan/mt or 0.16%. Trading volume decreased to 38,864 lots, and open interest fell by 571 lots to 110,000 lots.

Zinc Price Forecast: Overnight, LME zinc recorded a small bullish candlestick, with the 5/10-day moving averages forming resistance above. Currently, more funds are waiting for Powell's speech on Friday to confirm the September interest rate cut, with the US dollar closing lower and non-ferrous metals slightly rebounding, leading to an upward shift in the center of LME zinc. Overnight, SHFE zinc recorded a doji, with domestic consumption still showing weakness, but continuous destocking overseas has raised market concerns, making funds cautious. The center of SHFE zinc moved up slightly, and it is expected that SHFE zinc will mainly consolidate today.

Tin

Futures: The most-traded SHFE tin contract (SN2509) pulled back after a slight rally in the night session, closing at 267,800 yuan/mt, down 0.23% from the previous trading day.

Macro: (1) At the upcoming summit between Lee Jae-myung and Donald Trump, South Korea will announce private sector investment plans totaling approximately $150 billion in the US. This is separate from the $350 billion investment fund agreed upon during last month's tariff negotiations. These investments include projects already underway or planned by Korean companies in the US, including Samsung Electronics' chip plant and Hyundai Motor's $21 billion investment commitment. Hanwha Group has formulated specific investment plans related to shipbuilding cooperation with the US. (2) According to data from the China Academy of Information and Communications Technology, domestic mobile phone shipments in June 2025 reached 22.598 million units, down 9.3% YoY, with 5G phone shipments at 18.436 million units, down 16.7% YoY, accounting for 81.6% of total mobile phone shipments during the period. From January to June 2025, domestic mobile phone shipments totaled 141 million units, down 3.9% YoY, with 5G phone shipments at 121 million units, down 3.0% YoY, accounting for 85.5% of total mobile phone shipments during the period. (3) Trump's allies called for an investigation into US Fed Governor Cook over mortgage transactions, suggesting possible criminal violations. Trump subsequently demanded Cook's resignation. Cook responded that he would not resign due to bullying.

Fundamentals: (1) Supply-side disruptions: Overall tin ore supply is tightening in major production areas such as Yunnan, with some smelters potentially maintaining production halts for maintenance or implementing minor production cuts in August (Bullish ★). (2) Demand side: PV industry: Following the installation rush, orders for PV tin bars in east China have declined, with some producers reducing operating rates; Electronics industry: The electronics terminal sector in south China has entered the off-season, coupled with high tin prices, leading to strong wait-and-see sentiment among end-users, with orders only meeting essential needs; Other sectors: Demand remains stable in areas such as tinplate and chemicals, without exceeding expectations.

Spot market: High prices have led downstream enterprises to procure cautiously, generally maintaining only essential restocking. Traders' daily trading volume mostly ranges from 10-20 mt, with a few reaching over one truckload (approximately 30 mt), but overall activity remains low.