SMM Morning Comment For SHFE Base Metals On August 27

SHANGHAI, August 27 (SMM) –

Copper

Yesterday, LME copper was closed due to the UK summer bank holiday. Overnight, the most-traded SHFE copper 2410 contract opened at 74,850 yuan/mt, initially reaching a high of 75,070 yuan/mt, then narrowly fluctuated downward, hitting a low of 74,690 yuan/mt near the end of the session, and finally rebounded to close at 74,960 yuan/mt, up 0.83%. Trading volume reached 34,000 lots, and open interest reached 160,000 lots. Macro side, the eastern Libyan government announced the cessation of all oil production and exports, causing international oil prices to surge, which in turn pushed copper prices up. Additionally, US Fed's Daly stated that it is appropriate to start cutting interest rates now, but it is too early to determine the extent of the cuts. Fundamentally, a large amount of imported copper flowed into domestic trade over the weekend, increasing the supply of copper cathode in the spot market, causing premiums to fall under pressure. On the consumption side, as copper prices rose, downstream buyers were hesitant to purchase, leading to inactive procurement. As of Monday, August 26, SMM national copper stocks in major regions slightly decreased by 100 mt from last Thursday to 283,400 mt, continuing the destocking trend, but the decline significantly slowed down. Total stocks were still 206,000 mt higher YoY compared to 77,400 mt last year. In terms of prices, copper prices are expected to have some upward potential.

Aluminum

Market: The most-traded SHFE aluminum 2410 contract opened at 19,930 yuan/mt overnight, reaching a high of 19,980 yuan/mt and a low of 19,860 yuan/mt, and closed at 19,890 yuan/mt, down 35 yuan/mt, a decrease of 0.18%. On Monday, LME aluminum was closed for a day due to the summer bank holiday.

Summary: On the macro front, the expectation of a US Fed rate cut has intensified, creating a warm macro atmosphere. On the fundamental side, several industries in Sichuan have been required to stagger production due to persistent high temperatures, but aluminum production has not yet seen substantial cuts. Additionally, an aluminum plant in Inner Mongolia that partially halted production due to an accident over the weekend resumed normal operations on Monday afternoon, resulting in limited overall supply disruptions. The rapid rebound in aluminum prices has led to a decline in outflows from warehouses, suppressing the narrowing of spot discounts. However, with the traditional peak season and domestic economic stimulus policy, downstream consumption is gradually recovering, and the inventory reduction turning point is expected. In the short term, aluminum prices are expected to continue to fluctuate upward, with continued attention needed on macro changes and the sustainability of downstream aluminum consumption.

Lead

LME was closed on Monday due to the UK summer bank holiday and resumed trading on Tuesday.

Overnight, the most-traded SHFE lead 2409 contract opened lower at 17,750 yuan/mt, briefly touched a high of 17,795 yuan/mt at the beginning of the session, weakened to 17,570 yuan/mt as bulls reduced their positions, and closed at 17,640 yuan/mt, up 0.11%.

Zinc

Overnight, LME zinc was closed for the summer bank holiday.

The most-traded SHFE zinc 2410 contract opened at 24,180 yuan/mt. At the beginning of the session, SHFE zinc quickly touched 24,200 yuan/mt, and then fluctuated downward below the daily moving average as bears entered the market. Subsequently, bulls took profits and exited, leading SHFE zinc to plunge to a low of 23,920 yuan/mt. After bears exited, SHFE zinc rebounded from the low, recording a "V" shape reversal, and finally closed at 24,105 yuan/mt, an increase of 55 yuan/mt or 0.23%. Trading volume decreased to 75,377 lots, and open interest decreased by 1,678 lots to 124,000 lots. Overnight, SHFE zinc turned from positive to negative, with the upper Bollinger Bands forming resistance. The \supply and demand for zinc remained weak, with social inventory continuing to deplete. Additionally, expectations of interest rate cuts have also boosted zinc prices, which are expected to operate strongly.

Tin

Overnight, the most-traded SHFE tin futures contract closed at 266,390 yuan/mt, down 1,200 yuan/mt, a decrease of 0.45%, with a high of 266,660 yuan/mt and a low of 263,640 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 ingots were quoted at a premium of 0 yuan/mt over the SHFE 2409 contract, delivery brand was quoted at a premium of 0-700 yuan/mt over the SHFE 2409 contract, Yunnan Tin brand was quoted at a premium of 700-900 yuan/mt over the SHFE 2409 contract, and imported tin brands were quoted at a premium of 0 yuan/mt over the SHFE 2409 contract. Yesterday, tin prices rebounded after hitting a low, with some downstream companies making small purchases and others choosing to wait and see. Some trading companies had scattered transactions, while others completed transactions of about one truckload. Overall, the spot market transactions were relatively flat yesterday.

Nickel

On August 26, Jinchuan nickel was quoted at a premium of 1,000-1,200 yuan/mt, with an average of 1,100 yuan/mt, remaining flat compared to the previous trading day. Norilsk nickel was quoted at a discount of 400-0 yuan/mt, with an average of 200 yuan/mt, down 50 yuan/mt from the previous trading day. In the morning, the market showed a slightly stronger trend, but the spot market premiums fluctuated little compared to the previous working day. Nickel briquette prices were 128,400-128,900 yuan/mt, up 1,100 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 1,605 yuan/mt (nickel sulphate prices were 1,605 yuan/mt lower than nickel briquette prices).