SMM Morning Comment For SHFE Base Metals August 11

SHANGHAI, Aug 11 (SMM) –

Copper

LME copper prices closed at $8,448.5/mt overnight, a gain of 0.67%. Trading volume was 16,000 lots and open interest stood at 284,000 lots. SHFE 2309 copper contract prices finished at 68,370 yuan/mt last evening, a rise of 0.15%. Trading volume was 46,000 lots, and open interest stood at 167,000 lots. On the macro front, the latest inflation report released by the U.S. Department of Labor showed that due to the fall in commodity prices, the U.S. CPI rose by 3.2% year-on-year in July without seasonal adjustment. In addition, after US President Biden signed an executive order on "investment restrictions in China", British Prime Minister Sunak considered following Biden to restrict technology investment in China. In terms of fundamentals, the performance of copper prices stabilized yesterday, and the enthusiasm for downstream purchases was also high. However, with the gradual digestion of imported copper, the supply of goods that can be circulated in east China has tightened again, and the spot premiums rebounded. In south China, due to the increase in the volume of arrivals, the inventory has increased significantly, and the sellers lowered prices. If the discount continues, some sellers may choose to directly deliver cargoes to warehouses. In terms of consumption, if copper prices remain stable, it is expected that the recent improvement in demand can be maintained. Due to the influence of macro sentiment, copper prices will have limited downside room in the near future.

Aluminum

Overnight, the most-traded SHFE 2309 aluminium contract opened at 18,540 yuan/mt, with the lowest and highest prices at 18,480 yuan/mt and 18,560 yuan/mt before closing at 18,515 yuan/mt, up 20 yuan/mt or 0.11% from the previous trading day. LME aluminium opened at $2,197/mt on Thursday with its high and low at $2,220.5/mt and $2,195.5/mt respectively before closing at $2,203.5/mt, an increase of $6.5/mt or 0.3% from the previous trading day.

On the macro front, the Fed is expected to raise interest rates again. The US dollar index rebounded, making the overall performance of non-ferrous metals under pressure. China is focusing on expanding the domestic demand and economic stimulus policies continue to be implemented. In terms of fundamentals, aluminum production in Yunnan is speeding up, and pressure on the supply side gradually emerges. Due to floods and other factors in the north during the week, fewer aluminum ingots arrived. The social inventory of aluminum ingots is in a state of destocking, and orders in some downstream sectors increased, but consumption in mainstream markets is still relatively weak. In the short term, the accumulation of aluminum social inventory may lower than expected, and the low-inventory status is difficult to change in the short term, giving support to aluminum prices. With the release of positive sentiment at the macro level plus the current increase in supply and the poor fundamentals of downstream consumption, SMM predicted that the short-term aluminum prices will remain volatile, and follow-up attention should be paid to consumption and inventory.

Lead

Overnight, LME lead prices opened at $2,137.5/mt and closed at $2,136/mt last evening, a decrease of 0.19%.

The most active SHFE 2309 lead contract prices opened at 15,960 yuan/mt overnight and finally closed at 15,950 yuan/mt, down 0.19%, with the open interest up 1,790 lots to 101,000 lots.

Zinc

LME zinc prices closed down $29.5/mt or 1.19% at $2,450/mt yesterday evening. The trading volume increased to 7,690 lots, and open interest increased 407 lots to 206,000 lots. LME zinc inventory shed by 2750 mt to 91575 mt. Overnight, the US CPI data recorded 3.2%, which was lower than the expected 3.3%. Inflation rose moderately, but it was still far from the Fed's target. The most active SHFE 2309 zinc contract prices closed at 20,755 yuan/mt overnight, down 120 yuan/mt or 0.57%. The trading volume was down to 76,615 lots, and open interest increased 238 lots to 93,190 lots. The US dollar was strong, weighing on SHFE zinc; but the recent rise in overseas energy prices and domestic market sentiment will help zinc prices rebound.

Tin

Overnight, SHFE 2309 tin contract price quickly rose slightly after the opening. After reaching a high price of around 224,990 yuan/mt, it fell sharply and finally closed at 223,020 yuan/mt, down 0.32%.

Spot premiums and discounts changed little yesterday morning. Small brand tin ingots were offered at discounts of 400-600 yuan/mt, versus discounts of 0-100 yuan/mt and premiums of 0-400 yuan/mt for delivery brand, premiums of 600-1,200 yuan/mt for Yunxi brand, and discounts of 800-1,000 yuan/mt for imported brand. Downstream buying appetite improved only slightly after SHFE tin prices slumped.

Nickel

SHFE 2309 nickel contract opened at 164,600 yuan/mt at the night session on August 9, and closed at 166,580 yuan/mt, up 640 yuan/mt. Trading volume fell by 4,288 lots, and open interest increased by 1,454 lots.

From a macro perspective, since crude oil inventories were significantly higher than expected, commodities’ prices collectively fell yesterday, and SHFE nickel continued its decline to 166,580 yuan/mt. From a fundamental point of view, affected by the weak downstream demand, even if the nickel prices fell, the purchasing sentiment in the downstream market was still relatively depressed and the turnover situation was poor yesterday. Overall, it is expected that the subsequent nickel price will shock downward.