SMM Morning Comment For SHFE Base Metals On August 15

SHANGHAI, August 15 (SMM) –
Copper
Overnight, LME copper opened at $9,015/mt, experienced wide fluctuations during the initial and mid-session, reaching a session high of $9,054.5/mt, then continuously declined to a session low of $8,940/mt at the end of the trading session, and finally closed at $8,944.5/mt, down 0.38%. Trading volume reached 16,000 lots, and open interest reached 284,000 lots. Overnight, the most-traded SHFE copper 2409 contract opened at 72,320 yuan/mt, surged to a session high of 72,690 yuan/mt in the initial session, then continuously declined to a session low of 71,900 yuan/mt at the end of the trading session, and finally closed at 72,010 yuan/mt, down 0.19%. Trading volume reached 37,000 lots, and open interest reached 163,000 lots. Macro side, the overall US CPI YoY for July recorded 2.9%, marking the first return to the 2% range since March 2021. After the data release, traders lowered their expectations for a 50 basis points rate cut by the US Fed next month. The US dollar index gained, exerting some pressure on copper prices. Fundamentals side, supply side, arrivals have somewhat decreased. Demand side, with weaker supply and demand for secondary copper, downstream consumption has significantly rebounded, and imported non-registered and hydro sources are highly favoured. Overall, approaching delivery, copper prices are expected to fluctuate downward before delivery.

Aluminum
Market: The most-traded SHFE aluminum 2409 contract opened at 19,095 yuan/mt overnight, with a high of 19,160 yuan/mt, a low of 19,030 yuan/mt, and closed at 19,055 yuan/mt, up 15 yuan/mt, or 0.08%. On Wednesday, LME 3M aluminum opened at $2,332.5/mt, with a high of $2,365/mt, a low of $2,319/mt, and closed at $2,327/mt, up $1/mt, or 0.04%.

Summary: On the macro front, the US July CPI data was released overnight, showing that core goods were the main factor driving overall inflation down, while the energy sub-index rebounded. After the data release, the market leaned towards pricing in a weakening economy, leading to a pullback in rate cut expectations, and non-ferrous metals prices surged and then fell back. Fundamentally, domestic aluminum operating capacity gradually stabilized, with supply side peaking. Cost side, the alumina market prices are fluctuating at high levels, providing strong support for aluminum costs. This week, downstream aluminum consumption shows signs of stabilizing and recovering, with social inventory showing a slight destocking, indicating positive signals. SMM expects aluminum prices to bottom out. Future attention should be paid to macroeconomic guidance from US employment and other economic data, as well as changes in aluminum consumption.

Lead
Overnight, LME lead opened at $1,997.5/mt. The market bet on a US Fed rate cut in September, causing the US dollar index to plummet, and most base metals strengthened. LME lead, driven by destocking factors, quickly rebounded above $2,000/mt after stopping its decline, and finally closed at $2,017.5/mt, up 1.64%.
Overnight, the most-traded SHFE lead 2409 contract opened at 17,355 yuan/mt. The lead ingot inventory build-up and the expected production cuts at secondary plants coexisted, leading to intense long-short battles. After rising at the beginning of the session, SHFE lead hovered around 17,450 yuan/mt for most of the trading period, finally closing at 17,470 yuan/mt, up 0.26%. Its open interest was 70,169 lots, down 1,796 lots from the previous trading day.

Zinc
Overnight, LME zinc opened at $2,695/mt. At the beginning of the session, with an increase in short positions, LME zinc's price center shifted downward to a low of $2,677/mt. During European trading hours, with an increase in long positions, LME zinc fluctuated upwards to a high of around $2,752/mt and then consolidated. Towards the end of the session, as funds exited, LME zinc's price center shifted downward to around $2,700/mt and consolidated, finally closing up at $2,705/mt, an increase of $17.5/mt or 0.56%. Trading volume increased to 12.2 lots, and open interest increased by 1,117 lots to 219,000 lots. Overnight, LME zinc recorded a bullish candlestick, with LME zinc inventory decreasing by 875 mt to 262,275 mt, a decline of 0.33%. With US CPI data coming in lower than expected, the weak dollar and expectations of a US Fed rate cut boosted LME zinc, causing its center to shift upward. It is expected that LME zinc prices will fluctuate today.
Overnight, the most-traded SHFE zinc 2410 contract opened at 22,765 yuan/mt. At the beginning of the session, SHFE zinc briefly moved upwards to a high of 22,850 yuan/mt. Subsequently, with an increase in short positions, SHFE zinc prices fluctuated downward, reaching a low of 22,510 yuan/mt towards the end of the session, and finally closed down at 22,530 yuan/mt, a decrease of 430 yuan/mt or 1.87%. Trading volume decreased to 65,115 lots, and open interest increased by 1,621 lots to 85,862 lots. Overnight, SHFE zinc recorded a bearish candlestick, dragged down by macroeconomic sentiment. The widening M1-M2 gap and weak domestic demand dampened market confidence, leading to a pullback in SHFE zinc. It is expected that SHFE zinc prices will mainly fluctuate and consolidate today.

Tin
In the night trading session yesterday, the most-traded SHFE tin contract closed at 255,590 yuan/mt, down 400 yuan/mt, a decrease of 0.16%. The highest price was 258,300 yuan/mt, and the lowest was 254,050 yuan/mt.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as below. Small brand tin ingots were quoted at a premium of 700-1,000 yuan/mt over the SHFE 2409 contract, deliverable brands at a premium of 500-1,000 yuan/mt, Yunnan Tin brand at a premium of 1,000-1,200 yuan/mt, and imported tin brands at a premium of 200 yuan/mt over the SHFE 2409 contract. Tin prices fluctuated widely yesterday, and downstream companies were cautious in their purchases, with a few companies restocking as needed based on orders. Overall, the spot market was relatively quiet yesterday.

Nickel
On August 14, Jinchuan nickel was quoted at a premium of 1,300-1,500 yuan/mt, with an average of 1,400 yuan/mt, remaining unchanged from the previous trading day. Norilsk nickel was quoted at a discount of 0-200 yuan/mt, with an average discount of 100 yuan/mt, down 100 yuan compared to the previous trading day. In the morning, the market fluctuated downward, and the spot market premium showed little fluctuation compared to the previous working day. Nickel briquette prices were 126,300-126,600 yuan/mt, an increase of 400 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 314 yuan/mt (nickel sulphate prices were 314 yuan/mt lower than nickel briquette prices).