SMM Morning Comment For SHFE Base Metals August 2

SHANGHAI, Aug 2 (SMM) –

Copper

LME copper prices closed at $8,636/mt overnight, a decline of 2.26%. Trading volume was 26,000 lots and open interest stood at 281,000 lots. The most active SHFE 2309 copper contract finished at 69,700 yuan/mt evening, down 1.12%. Trading volume was 67,000 lots and open interest stood at 199,000 lots. On the macro front, relatively solid U.S. manufacturing and construction data released last night outweighed the drop in job vacancies to their lowest level in more than two years. In terms of prices, as Fed officials emphasized that whether to continue raising interest rates still needs to pay attention to economic data, the market is waiting for more US economic data to be released later this week. Copper prices are expected to remain range-bound at high levels.

Aluminum

Overnight, the most-traded SHFE 2309 aluminium contract opened at 18,520 yuan/mt, with the lowest and highest prices at 18,510 yuan/mt and 18,510 yuan/mt before closing at 18,545 yuan/mt, down 40 yuan/mt or 0.22%. LME aluminium opened at $2,204.5/mt on Tuesday, with its high and low at $2,286/mt and $2,244/mt respectively before closing at $2,253/mt, a decrease of $34/mt, or 1.49%, from Monday.

On the macro level, the strengthening of the US dollar index overnight suppressed the upward movement of aluminum prices. In terms of fundamentals, the resumption of aluminium production in Yunnan is speeding up, and it is expected that some large smelters in the region will be able to produce at full capacity by the end of August, potentially fueling the total domestic operating capacity to a record high. At present, the amount of resumed production is mainly liquid aluminum, and there is no large aluminum ingot oversupply pressure. In the short term, the inflection point of inventory has not yet appeared, and there is no imminent oversupply. On the demand side, favorable policies have promoted real estate, automobile, and other related consumption to gradually pick up, driving the operating rate of extrusion and other aluminum downstream factories to rise, but some sectors are still in the off-season, and the impact of follow-up policies still needs further observation. In the short term, SHFE aluminium will remain volatile, and consumption and inventory still need attention.

Lead

LME lead prices closed at $2,135.5/mt in overnight trading, down 1.32%. Open interest decreased by 792 lots to 121,000 lots. Trading volumes fell 34 lots to 3,829 lots. The most active SHFE 2309 lead contract prices closed at 15,960 yuan/mt last evening, up 0.38%. Open interest increased by 466 lots to 106,000 lots from the previous trading day, and trading volumes fell 29,111 lots to 24,705 lots.

Zinc

LME zinc prices closed at $2,555/mt last evening, down $20/mt, or 0.78%. Trading volume decreased to 11,376 lots, and open interest increased by 2,786 lots to 199,000 lots. LME zinc inventory increased by 525 mt to 99,675 mt, an increase of 0.53%.

The most active SHFE 2309 zinc contract settled at 21,245 yuan/mt last evening, up 95 yuan/mt or 0.45%. Trading volumes decreased to 77,696 lots, and open interest was down 1,594 lots to 115,000 lots. SHFE zinc prices are expected to remain strong.

Tin

Overnight, SHFE 2309 tin contract price gradually shook up after opening low. After reaching a high price of around 228,520 yuan/mt, it shock fell back and closed at 226,940 yuan/mt, down 1.25%.

Nickel

SHFE 2309 nickel contract opened at 172,000 yuan/mt at the night session on August 1, and closed at 171,270 yuan/mt, down 990 yuan/mt. Trading volume fell by 9161 lots, and open interest decreased by 9740 lots. This indicates that long investors are eager to close their positions, which could cause short-term prices for nickel to continue to decline.

On the macro level, SHFE nickel fluctuated downwards yesterday due to the gradual fading of macro positive sentiment. From a fundamental perspective, the benchmark for the spot premium has changed from 2308 to 2309 contract yesterday. Excluding the monthly difference factor, the overall spot premium continued to decline. According to SMM research, in demand side, as nickel price was still at a high level, even though the spot premium reduced, the absolute price was still high, the willingness to purchase in downstream was low, and the warehouses of some downstream factories still had nickel plate stocks, so the transaction in the spot market yesterday was weak. In summary, it is expected that nickel prices will fluctuate rangebound in the future.