SMM Morning Comment For SHFE Base Metals On July 17

SHANGHAI, July 17 (SMM) –
Copper
Overnight, LME copper opened at $9,748/mt, initially hitting a session high of $9,749.5/mt amid fluctuations. It then declined to a session low of $9,626/mt, with a slight rebound and consolidation at the end of the trading session, ultimately closing at $9,664/mt, down by 1.06%. Trading volume reached 23,000 lots, and open interest stood at 320,000 lots.
The most-traded SHFE copper 2408 contract opened at 78,730 yuan/mt, initially declining to a session low of 78,280 yuan/mt, then rising to a session high of 78,850 yuan/mt, and consolidating at the end of the trading session, ultimately closing at 78,610 yuan/mt, down by 0.95%. Trading volume reached 41,000 lots, and open interest stood at 180,000 lots.
Macro-wise, US June retail sales data exceeded expectations, marking the largest increase in three months. Meanwhile, Trump stated he would not replace Fed Chairman Powell before the end of his term and does not wish to cut interest rates before November, causing the US dollar index to surge and putting pressure on copper prices.
Fundamentally, the recent trend of destocking continues, with a decrease in the proportion of registered imported copper. Market supply of some spot goods is tightening, with sellers holding firm on prices, while downstream procurement remains cautious. Overall, copper prices are expected to remain at high levels.
 
Aluminum
Market: Overnight, the most-traded SHFE aluminum 2409 contract opened at 19,800 yuan/mt, reaching a high of 19,870 yuan/mt and a low of 19,730 yuan/mt, and closed at 19,810 yuan/mt, down 85 yuan/mt, a decrease of 0.43%. The previous trading day, LME aluminum opened at $2,461/mt, reached a high of $2,462/mt and a low of $2,403/mt, and closed at $2,416/mt, down $44/mt, a decrease of 1.79%.
Summary: On the macro front, the US dollar index initially rose as retail sales data released last night exceeded expectations. However, the index later gave up all its intraday gains as the market weighed the possibility of a US Fed rate cut. The upcoming 20th Third Plenary Session in China may bring new positive news, but the weekend's assassination attempt on Trump has increased his chances of winning, and the market expects his policies to be favorable to the dollar. Together with the uncertain situation of the Israel-Palestine conflict, this has added uncertainty to the recent market. On the fundamentals, domestic aluminium production is increasing, with some capacity yet to be resumed. Downstream aluminium processing and end-user demand have entered the off-season, with demand in some sectors being hit. The operating rate in the aluminium processing industry is declining, social inventory destocking is weak, and inventory levels are at a three-year high for the same period. Spot discounts may persist in the short term. The aluminium market currently lacks upward drivers, as the fundamentals remain bearish during the off-season. SMM expects aluminium prices to remain weak in the short term, with attention needed on macro changes and disruptions in the raw material sector impacting aluminium prices.

Lead
Overnight, LME lead opened at $2,190/mt, briefly touched a high of $2,197/mt during the Asian session, and then fluctuated downward. In the European session, the dollar first weakened and then strengthened, causing LME lead to plunge to a low of $2,168.5/mt. In the night session, it rebounded, driven by the upward movement of SHFE lead, closing at $2,189/mt, down by 0.11%.
Overnight, the most-traded SHFE lead contract 2408 opened at 19,700 yuan/mt, briefly touched a low of 19,670 yuan/mt at the beginning of the session, and then rebounded due to increased positions by bulls, reaching a high of 19,855 yuan/mt. It closed at 19,805 yuan/mt, up by 0.43%.

Zinc
Overnight, LME zinc opened at $2,952.5/mt, reaching a high of $2,958/mt, then shifting its focus to around $2,890/mt, and finally closed at $2,896/mt, down $56/mt, a decrease of 1.9%. Trading volume increased to 10,451 lots, and open interest decreased by 1,179 lots to 230,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 10-day moving average above forming resistance and the MACD bearish candlestick expanding. Overnight, LME inventory continued to decrease by 1,375 mt to 246,100 mt, a drop of 0.56%. As the better-than-expected US CPI data boosted the dollar, LME zinc ran weak.

Overnight, the most-traded SHFE 2409 zinc contract opened lower at 24,090 yuan/mt, dipping to 23,980 yuan/mt, then consolidating around 24,100 yuan/mt, and finally closed at 24,120 yuan/mt, down 245 yuan/mt, a decrease of 1.01%. Trading volume decreased to 66,147 lots, and open interest increased by 5,635 lots to 88,786 lots. Overnight, SHFE zinc recorded a bullish candlestick, but the daily K-line focus shifted downward, and the KDJ indicator expanded downward. Overnight, dragged down by weak overseas futures and the expectation of increased supply on the fundamentals, SHFE zinc ran at a low level, with attention on the support at the 24,000 yuan/mt mark.

Tin
In the night session yesterday, the most-traded SHFE tin contract closed at 273,040 yuan/mt, down 110 yuan/mt, a decrease of 0.04%, with a high of 274,180 yuan/mt and a low of 270,860 yuan/mt.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as below. Small brand tin ingots were offered at discounts of 200-700 yuan/mt over SHFE 2408 tin contract, versus discounts of 400 yuan/mt to premiums of 500 yuan/mt for delivery brands, and premiums of 400-700 yuan/mt for Yunxi brand. SHFE tin prices moved rangebound during the morning session, with downstream producers still holding a cautious sentiment. Overall, the spot market transactions remained weak yesterday.

Nickel
On July 16, Jinchuan nickel was at a premium of 1,400-1,500 yuan/mt, with an average of 1,450 yuan/mt, an increase of 50 yuan/mt compared to the previous trading day. Russian nickel was at a discount of 0-100 yuan/mt, with an average of 50 yuan/mt, an increase of 50 yuan/mt compared to the previous trading day. In the morning, as the market ran weak, premiums in the spot market saw a slight increase. Some traders reported relatively dull trading atmosphere in the spot market overall. The price of nickel briquette was 131,900-132,200 yuan/mt, a decrease of 950 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 2,505 yuan/mt (nickel sulphate prices were 2,505 yuan/mt lower than nickel briquette prices).