SMM Morning Comment For SHFE Base Metals On August 13

SHANGHAI, August 13 (SMM) –

Copper

LME copper opened at $8,960.5/mt overnight. After a slight rise at the beginning of the session, it dipped to $8,939.5/mt, then climbed throughout the session, reaching a high of $9,062/mt. It fluctuated slightly towards the end and finally closed at $9,028/mt, up 2.23%. Trading volume reached 16,000 lots, and open interest reached 283,000 lots. Overnight, the most-traded SHFE copper 2409 contract opened at 72,400 yuan/mt, dipped to 72,200 yuan/mt at the beginning, then climbed throughout the session, reaching a high of 73,220 yuan/mt. It consolidated towards the end and finally closed at 72,900 yuan/mt, up 1.7%. Trading volume reached 59,000 lots, and open interest reached 168,000 lots.

Macro-wise, regarding the Middle East situation, many believe an Iranian attack on Israel is imminent. White House officials stated they are prepared for a major attack this week, boosting risk aversion sentiment. OPEC has lowered its global oil demand growth forecast for this year and next, pushing oil prices higher, which also supported copper prices. Additionally, according to external sources on August 12, Peru's copper production in June fell 11.7% YoY, which may also provide some support to copper prices.

Fundamentally, there was a significant destocking last weekend, and downstream consumption showed a clear recovery. As of Monday, August 12, SMM national mainstream copper stocks fell sharply by 19,600 mt to 318,800 mt compared to last Thursday, the largest decline in recent weeks. Overall, with rising risk aversion sentiment and some recovery in consumption, the market expects copper prices to bottom out and rebound after a series of data from China and the US are released mid-week. Copper price may be firm before the data is released.

Aluminum

Market: The most-traded SHFE aluminum contract 2409 opened at 19,210 yuan/mt overnight, with a high of 19,210 yuan/mt, a low of 19,105 yuan/mt, and closed at 19,140 yuan/mt, up 17 yuan/mt, or 0.09%. On Monday, LME 3M aluminum opened at $2,299/mt, with a high of $2,331.5/mt, a low of $2,297/mt, and closed at $2,309/mt, up $14/mt, or 0.61%.

Summary: On the macro front, the Chinese government continues to boost the domestic economy, and the US Fed's interest rate cuts remain uncertain in the short term. Fundamentally, domestic aluminum operating capacity is gradually stabilizing, and the supply side is peaking. Cost side, the alumina market prices are fluctuating at high levels, providing strong support for aluminum fundamentals. Entering August, downstream aluminum consumption shows signs of stabilizing and recovering, with social inventory showing a slight destocking trend, indicating positive signals. SMM expects aluminum prices to bottom out.

Lead

Overnight, LME lead opened at $2,040/mt. Against the backdrop of continuously declining LME lead inventories, LME lead showed a fluctuating upward trend throughout the day. During this period, LME lead reached a high of $2,082/mt, climbing to a nearly two-week high. Until the end of the session, bulls took profits, and LME lead almost completely gave back the day's gains, finally closing at $2,032.5/mt, down 0.34%.

Overnight, the most-traded SHFE lead 2409 contract opened at 18,270 yuan/mt. With the accumulation of domestic lead ingot inventories, SHFE lead moved downwards after a higher opening. At the beginning of the session, SHFE lead once surged to 18,270 yuan/mt, then gradually retreated, and finally closed at 18,150 yuan/mt, up 1.06%. The open interest reached 79,721 lots, an increase of 427 lots compared to the previous trading day.

Zinc

Overnight, the White House stated that Iran might launch a large-scale attack on Israel this week; Hezbollah withdrew from Beirut, possibly preparing for the worst; Putin's latest statement: expel the enemy from Russian territory; OPEC lowered its global oil demand growth forecast; Chengdu optimized new housing transaction policies: relaxed the first-home recognition standards; multiple institutions responded by stopping long-term bond market-making; over 100 insurance products with a 3.0% guaranteed interest rate will be withdrawn by the end of the month. Overnight, LME zinc opened at $2,736.5/mt, initially fluctuating along the average daily line, briefly dipping to $2,731.5/mt. During European trading hours, shorts reduced positions, and LME zinc quickly surged to a high of $2,783.5/mt. However, due to insufficient upward momentum, it fluctuated downward and finally closed up at $2,749/mt, an increase of $8.5/mt or 0.31%. Trading volume reduced to 10,298 lots, and open interest increased by 671 lots to 222,000 lots. Overnight, LME zinc recorded a bullish candlestick, with LME inventory decreasing by 400 mt to 239,525 mt, a decline of 0.17%. Due to geopolitical impacts, precious metals surged, driving a general rise in non-ferrous metals, and LME zinc's focus shifted upward. It is expected that LME zinc will fluctuate today.

Overnight, the most-traded SHFE zinc 2409 contract opened at 23,090 yuan/mt, initially dipping to 22,945 yuan/mt. Subsequently, longs increased positions, and SHFE zinc fluctuated upward to a high of 23,225 yuan/mt. Later, as funds took profits and exited, SHFE zinc's upward momentum weakened, and its focus fell back to around 23,140 yuan/mt, fluctuating and consolidating. It finally closed up at 23,165 yuan/mt, an increase of 25 yuan/mt or 0.11%. Trading volume reduced to 76,040 lots, and open interest increased by 128 lots to 72,180 lots. Overnight, SHFE zinc recorded a bullish candlestick. With macro sentiment bullish and non-ferrous metals generally rising, together with the continued decrease in domestic inventory, SHFE zinc's focus shifted upward. It is expected that SHFE zinc will mainly fluctuate and consolidate today.

Tin

In the night trading session yesterday, the most-traded SHFE tin contract closed at 257,300 yuan/mt, up 180 yuan/mt, an increase of 0.07%, with a high of 259,430 yuan/mt and a low of 256,320 yuan/mt.

Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as below. Small brand tin ingots were offered at premiums of 700-1,500 yuan/mt over SHFE 2409 tin contract, versus premiums of 500-1,000 yuan/mt for delivery brands and premiums of 1,000-1,400 yuan/mt for Yunxi brand. Tin prices continued to rise yesterday, and downstream producers' purchasing sentiment was low, with many adopting a wait-and-see attitude. Overall, the spot market was relatively quiet yesterday.

Nickel

On August 12, Jinchuan nickel was quoted at a premium of 1,300-1,600 yuan/mt, with an average of 1,450 yuan/mt, down 100 yuan/mt compared to the previous trading day. Norilsk nickel was quoted at a discount of 300 yuan/mt to a premium of 200 yuan/mt, with an average discount of 50 yuan/mt, remaining unchanged from the previous trading day. In the morning, the market fluctuated downward, and the spot premium showed little fluctuation compared to the previous working day. Nickel briquette prices were 126,000-126,200 yuan/mt, a decrease of 2,150 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 150 yuan/mt (nickel sulphate prices were 150 yuan/mt higher than nickel briquette prices).