SMM Morning Comment For SHFE Base Metals On August 20

SHANGHAI, August 20 (SMM) –

Copper

Overnight, LME copper opened at $9,244/mt, briefly rose to $9,277/mt at the beginning of the session, then fluctuated downward to a low of $9,203/mt, and finally rebounded to close at $9,260/mt, up 0.9%. Trading volume reached 17,000 lots, and open interest reached 286,000 lots. Overnight, the most-traded SHFE copper 2409 contract opened at 74,050 yuan/mt, briefly touched 74,270 yuan/mt at the beginning of the session, then fluctuated downward to a low of 73,870 yuan/mt, and finally rebounded to close at 74,030 yuan/mt, up 0.54%. Trading volume reached 26,000 lots, and open interest reached 144,000 lots. Macro side, speeches by US Fed officials have strengthened market expectations for a rate cut starting in September, leading to a decline in the US dollar index, which is bullish for copper prices. Additionally, the continuous decline in China's copper cathode stocks has stimulated market expectations for improved demand. Fundamentally, the upward trend in copper prices has prompted downstream enterprises to restock, increasing consumption demand. As of Monday, August 19, SMM copper stocks in national major regions decreased by 12,700 mt from last Thursday to 288,900 mt, with total stocks up 216,000 mt YoY from 72,900 mt. In terms of prices, copper prices are expected to continue to rise.

Aluminum

Market: Overnight, the most-traded SHFE aluminum 2409 contract opened at 19,625 yuan/mt, reached a high of 19,730 yuan/mt and a low of 19,615 yuan/mt, and closed at 19,625 yuan/mt, up 185 yuan/mt, or 0.95%. Overnight, LME 3M aluminum opened at $2,367/mt, reached a high of $2,449.5/mt and a low of $2,365/mt, and closed at $2,430/mt, up $64.5/mt, or 2.73%.

Summary: The US dollar index continued its decline overnight, hitting a seven-month low, leading to a broad rise in non-ferrous metals. On the macro front, recent US retail and inflation data performed well, alleviating concerns about economic recession. Additionally, rising geopolitical tensions provided support for the non-ferrous metals market. On the fundamentals, domestic aluminum supply has peaked, with only sporadic resumption expected in regions like Guizhou and Sichuan. Downstream, thanks to improved orders for 3C and NEVs, the operating rate of leading extrusion enterprises saw a slight increase last week. Meanwhile, with the traditional peak season and domestic economic stimulus policies, downstream consumption is expected to improve. Last week, aluminum social inventory continued to decline slightly, with a potential turning point in the second half of August, further weakening the supply-demand mismatch. Considering that recent strong performance of alumina provides solid cost support for aluminum, SMM expects short-term aluminum prices to rebound. Continued attention is needed on aluminum consumption and changes in aluminum social inventory.

Lead

Overnight, LME lead opened at $2,047/mt, ran strongly during the Asian session, climbed to $2,062/mt in the European session, then fell to a low of $2,021/mt, and rebounded before closing, ending at $2,037.5/mt, down $5.5/mt, a decrease of 0.27%.

Overnight, the most-traded SHFE lead 2409 contract opened at 17,615 yuan/mt, briefly touched a high of 17,655 yuan/mt at the beginning of the session, then fell all the way to a low of 17,455 yuan/mt, and finally closed at 17,475 yuan/mt, down 185 yuan/mt, a decrease of 1.05%.

Zinc

Overnight, LME zinc opened at $2,767.5/mt, initially dipped to $2,767.5/mt, and then fluctuated upward above the daily average line to a high of $2,811/mt. Near the end of the session, LME zinc slid straight down below the daily average line, maintaining a fluctuating trend at the end of the session, and finally closed at $2,790.5/mt, an increase of $20.5/mt or 0.74%. Trading volume increased to 8,029 lots, and open interest decreased by 1,463 lots to 217,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the 5-day moving average providing support. LME inventory decreased by 600 mt to 260,000 mt, a decline of 0.23%. As market concerns about a US economic recession eased, the US dollar index continued to decline, boosting LME zinc prices. The overall price focus continued to shift upward, with attention on subsequent speeches by US Fed officials.

Overnight, the most-traded SHFE zinc 2410 contract opened at 23,400 yuan/mt, initially reached a high of 23,400 yuan/mt, then fluctuated downward throughout the session, hitting a low of 23,250 yuan/mt near the end, and finally closed at 23,275 yuan/mt, a decrease of 30 yuan/mt or 0.13%. Trading volume decreased to 39,381 lots, and open interest increased by 1,292 lots to 96,887 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 5-day moving average providing support. SMM reported on Monday that zinc ingot inventories in seven regions continued to decrease. However, ferrous metals prices continued to drag down galvanized consumption. In the off-season for downstream consumption, SHFE zinc lacked upward momentum, resulting in a slight decline in the night session.

Tin

Overnight, the most-traded SHFE tin futures contract closed at 264,840 yuan/mt, up 2,240 yuan/mt, an increase of 0.85%, with a high of 266,300 yuan/mt and a low of 263,960 yuan/mt.

During yesterday's morning session, trading companies' quotes for various domestic tin ingot brands showed little change compared to recent days. Small brand tin ingot was quoted at a premium of 0-500 yuan/mt over the SHFE 2409 contract. Delivery brand was quoted at a premium of 500-1,000 yuan/mt over the SHFE 2409 contract. Yunnan Tin brand was quoted at a premium of 1,000-1,200 yuan/mt over the SHFE 2409 contract. Imported spot tin brand was quoted at a premium of 0 yuan/mt over SHFE 2409 contract. Yesterday, tin prices fluctuated widely, and downstream companies maintained a wait-and-see attitude, with a few companies restocking as needed. Most trading companies had sporadic transactions, with a few trading companies transacting 10-20 mt. Overall, yesterday's spot market transactions were relatively sluggish.

Nickel

On August 19, Jinchuan nickel was quoted at a premium of 1,300-1,400 yuan/mt, with an average of 1,350 yuan/mt, down 50 yuan/mt compared to the previous trading day. Norilsk nickel was quoted at a discount of -300-0 yuan/mt, with an average discount of 150 yuan/mt, remaining flat compared to the previous trading day. In the morning, the market fluctuated upwards, and the spot market premium showed little fluctuation compared to the previous working day. Nickel briquette prices were 127,500-127,800 yuan/mt, an increase of 500 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 1,400 yuan/mt (nickel sulphate prices were 1,400 yuan/mt lower than nickel briquette prices).