SMM Morning Comment For SHFE Base Metals On August 29

SHANGHAI, August 29 (SMM) –

Copper

US Dollar Index Rebounded, Copper Prices Declined Overnight [SMM Copper Morning Comment]

LME copper opened at $9,279.5/mt overnight, initially dipped slightly before rising, reaching a high of $9,306/mt during the session, then declined all the way to a low of $9,233.5/mt near the close, and finally closed at $9,238.5/mt, down 1.92%. Trading volume reached 17,000 lots, and open interest reached 283,000 lots. The most-traded SHFE copper contract 2410 opened at 74,250 yuan/mt overnight, initially reached a high of 74,520 yuan/mt, then slightly declined during the session, reaching a low of 74,060 yuan/mt near the close, and finally slightly rebounded to close at 74,300 yuan/mt, down 1%. Trading volume reached 39,000 lots, and open interest reached 163,000 lots. Macro-wise, the US dollar index recorded its largest gain since June 3, which is bearish for copper prices. Additionally, a spokesperson from the US Department of Labor stated that the release of employment data for August 21 was delayed due to technical issues, and the market needs more economic data for guidance. Attention is focused on the PCE data to be released on Friday, which is the US Fed's preferred inflation indicator. Fundamentally, on the consumption side, end-of-month downstream transactions for cargoes with invoices dated next month are limited. Traders reported mediocre trading volumes, with downstream buyers preferring to transact directly with smelters. According to the survey, destocking at smelters in east China has increased compared to before, and overall consumption remains resilient. Price-wise, the downside space for copper prices is expected to be limited.

Aluminum

US Dollar Index Surges, LME Aluminum Under Pressure [SMM Aluminum Morning Comment]

SMM, Aug 29: Overnight, the most-traded SHFE aluminum 2410 contract opened at 19,845 yuan/mt, reaching a high of 19,925 yuan/mt and a low of 19,810 yuan/mt, and closed at 19,860 yuan/mt, down 45 yuan/mt from the previous close, a decrease of 0.23%. On Wednesday, LME aluminum opened at $2,543/mt, with a high of $2,548.5/mt and a low of $2,484/mt, closing at $2,484/mt, down $62.5/mt, a decrease of 2.45%.

Summary: On the macro front, the market is gradually digesting the expectation of a rate cut by the US Fed next month, currently awaiting inflation data, which may provide clues on the extent of the rate cut. On the fundamentals side, recent disturbances such as power rationing have not had a substantial impact on aluminum production, with supply remaining relatively stable. Currently, the aluminum market is seeing a decline in purchasing strength and ample circulation of aluminum ingots, which suppresses the narrowing of spot discounts. However, the consumption side is gradually recovering, driving up downstream operating rates, and a turning point in inventory reduction is expected. In the short term, aluminum prices are expected to maintain a fluctuating trend, with caution advised regarding the risk of price declines due to lower-than-expected rate cuts or peak season consumption performance.

Lead

The US dollar index rebounded, coupled with concerns over demand, causing LME lead to drop more than 2% overnight [SMM Lead Morning Comment]

Overnight, LME lead opened at a high of $2,124/mt and declined during the Asian session. Due to the rebound of the US dollar index and concerns over demand, LME lead continued to weaken during the European session, eventually closing at a low of $2,070.5/mt, a decrease of 2.61%.

Overnight, the most-traded SHFE lead 2410 contract opened at 17,310 yuan/mt, briefly touched a low of 17,275 yuan/mt at the beginning of the session, rebounded to a high of 17,465 yuan/mt, and closed at 17,395 yuan/mt, a decrease of 0.88%.

Zinc

The US Dollar Surges, Pressuring LME Zinc Prices [SMM Zinc Morning Comment]

SMM, Aug 29: Overnight, the US Department of Labor reported that a technical glitch delayed the release of last week's employment data; Israel denied reports of a comprehensive humanitarian ceasefire in Gaza; Libya's oil production is expected to decline further; Wang Yi held a new round of strategic communication with Sullivan; and the Deputy General Manager of Haitong Securities was repatriated. Overnight, LME zinc opened at $2,945/mt. At the beginning of the session, bears increased their positions, causing LME zinc to follow the daily moving average and fluctuate downward. During European trading hours, LME zinc accelerated its decline, with the center of gravity shifting to around $2,875/mt, and it briefly touched a low of $2,865/mt. In the night session, LME zinc attempted to break above but was blocked by the daily moving average, ultimately closing down at $2,872.5/mt, a decrease of $64/mt or 2.18%. Trading volume increased to 12,654 lots, and open interest rose by 1,319 lots to 219,000 lots. Overnight, LME zinc declined, with the upper Bollinger Bands forming resistance and the KDJ indicator expanding downward. Overnight, LME inventory decreased by 6,175 mt to 249,625 mt, a drop of 2.41%, recording a reduction in LME inventory. The sharp rise in the US dollar overnight pressured the performance of base metals, and the uncertainty of economic data increased bearish sentiment, causing the center of gravity for LME zinc to shift downward.

Overnight, the most-traded SHFE zinc 2410 contract opened lower at 23,915 yuan/mt. At the beginning of the session, SHFE zinc followed the daily moving average and fluctuated upward. Subsequently, bulls entered the market, causing SHFE zinc to rise rapidly, with the center of gravity shifting to 24,110 yuan/mt and reaching a high of 24,140 yuan/mt. At the end of the session, bears entered and bulls exited, causing the center of gravity for SHFE zinc to shift downward to around 24,050 yuan/mt, ultimately closing down at 24,075 yuan/mt, a decrease of 60 yuan/mt or 0.25%. Trading volume decreased to 95,117 lots, and open interest increased by 2,839 lots to 126,000 lots. Overnight, SHFE zinc recorded a positive candlestick, with the 5-day moving average forming resistance and the MACD positive candlestick narrowing. Dragged down by the overseas futures market, the center of gravity for SHFE zinc shifted downward. The impact of the off-season on the consumption side continued, and although consumption showed signs of improvement, the expectation of reduced production on the supply side still supported zinc prices.

Tin

SHFE tin prices opened lower and continued to decline in the night session, downstream enterprises waited for opportunities to restock at lower prices [SMM Tin Morning Comment]

SMM, August 29: In the night session yesterday, the most traded SHFE tin futures contract closed at 263,790 yuan/mt, down 4,030 yuan/mt, a decrease of 1.50%. The highest price was 265,360 yuan/mt, and the lowest was 263,140 yuan/mt. During the morning session yesterday, the domestic tin ingot brands' premiums and discounts quoted by trading companies did not change much compared to recent days. Small brand tin ingots were quoted at par with the SHFE 2409 contract, delivery brand prices ranged from par to a premium of 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 par with the SHFE 2409 contract. Tin prices fluctuated downward yesterday, and most downstream enterprises chose to wait for better restocking opportunities. Some trading companies made sporadic transactions, with very few trading companies transacting around 40 mt. Overall, the spot market transactions were weak yesterday.

Nickel

On August 28, Jinchuan nickel was quoted at a premium of 1,000-1,100 yuan/mt, with an average of 1,050 yuan/mt, remaining unchanged from the previous trading day. Norilsk nickel was quoted at a discount of 400 yuan/mt to a premium of 100 yuan/mt, with an average discount of 150 yuan/mt, also unchanged from the previous trading day. In the morning, the market gave back some of the gains from the previous night, but spot market premiums showed little fluctuation compared to the previous working day. Nickel briquette prices were 129,700-129,900 yuan/mt, down 275 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 2,300 yuan/mt (nickel sulphate prices were 2,300 yuan/mt lower than nickel briquette prices).