SMM Morning Comment For SHFE Base Metals August 7

SHANGHAI, August 7 (SMM) –

Copper

LME copper closed at $8,548.5/mt last Friday evening, a drop of 1.05%. Trading volume was 17,000 lots and open interest stood at 286,000 lots.

The most active SHFE 2309 copper contract finished at 69,070 yuan/mt overnight, down 0.23%. Trading volume was 39,000 lots, and open interest stood at 182,000 lots.

Aluminum

Last Friday night, the most-traded SHFE 2309 aluminium contract opened at 18,460 yuan/mt, with the lowest and highest prices at 18,440 yuan/mt and 18,530 yuan/mt before closing at 18,520 yuan/mt, up 15 yuan/mt or 0.08% from the previous trading day. LME aluminium opened at $2,224/mt last Friday, with its high and low at $2,224 /mt and $2,205/mt respectively before closing at $2,239/mt, an increase of $15/mt or 0.7% from the previous trading day.

On the macro front, the US private employment data enhanced expectations for the Fed’s interest rate hike, and the US dollar index rebounded, weighing down the overall non-ferrous metals. In order to boost demand, there may be more favorable policies to be poured out in China in the future. Fundamentally, as supply in Yunnan increased rapidly, aluminium supply pressure may gradually emerge. Due to floods and other factors in the north during the week, fewer aluminium ingot arrivals were reported, and aluminium social stocks shrank. Orders in some downstream sectors improved, but was not insufficient to boost aluminium consumption significantly. In the short term, low aluminium ingot social inventory may give a bottom support for aluminium prices, but the positive macro sentiment has faded. A possible fall in aluminium prices may be felt from supply increase and demand sluggishness. It is expected that the most-traded SHFE aluminium contract will fluctuate at 18,000-18,700 yuan/mt in the week ending August 11, while LME aluminium will run at $2,180-2,270/mt. Changes on consumption and inventory will deserve to be monitored.

Lead

LME lead prices closed at $2125/mt last Friday evening, down 0.7%.

The most active SHFE 2309 lead contract prices closed at 15,870 yuan/mt, an increase of 0.5%. Open interest stood at 105,000 lots, a decrease of 1,584 lots from the previous trading day.

Zinc

LME zinc prices closed up $0.5/mt or 0.02% at $2,505.5/mt last Friday evening. The trading volume decreased to 7,003 lots, and open interest added 798 lots to 201,000 lots. LME zinc inventory shed by 3,025 mt to 94,900 mt.

The most active SHFE 2309 zinc contract prices closed at 21,050 yuan/mt, up 80 yuan/mt or 0.38%. Trading volume fell to 66,051 lots, and open interest decreased by 46 lots to 107,000 lots.

Tin

On Friday night, SHFE 2309 tin contract price fell sharply after the opening. After reaching a low price of around 224,800 yuan/mt, it gradually rose and finally closed at 226,750 yuan/mt, down 1.2%.

Nickel

SHFE nickel experienced a volatile movement last week, declining by 0.29% WoW. On the macro level, the focus continued on policies following the political bureau meeting. Stimulus measures for consumption and policies supporting real estate and automotive industries were introduced, including the removal of purchase restrictions in certain second and third-tier cities and relaxing housing provident fund policies. These policies initially boosted SHFE nickel until last Wednesday night. On last Thursday, influenced by limited support from the pure nickel fundamentals, the price dropped to 167,580 yuan/mt. However, it rebounded to 169,970 yuan/mt on last Friday morning due to remarks from the National Development and Reform Commission emphasizing consumer promotion. Regarding fundamentals, a domestic refined nickel producer is planning equipment maintenance in August, but it is not expected to impact overall supply. Additionally, an overseas pure nickel project is set to begin production in mid-August, with a planned capacity of 50,000 mt/year. Initial production is estimated at 500-1000 mt/month, gradually increasing throughout the year. In terms of demand, military orders in the alloy sector remained steady, while civilian orders were somewhat restrained by rising raw material prices. Orders decreased in July, and alloy enterprises are generally cautious about civilian order expectations for August. In the electroplating industry, weak downstream demand and high raw material prices have led to continued reduction in pure nickel consumption throughout July. As July and August are the off-season for the electroplating industry, it's anticipated that nickel consumption will remain weak in August due to higher temperatures and sustained weak downstream demand. In summary, current nickel prices are primarily influenced by macro factors. With limited fundamental support, it's expected that nickel prices will continue to experience a volatile movement this week.