SMM Morning Comment For SHFE Base Metals On July 24

SHANGHAI, July 24 (SMM) –

Copper

LME copper opened at $9,176/mt overnight, initially reaching a session high of $9,190/mt, hitting a session low of $9,110.5/mt, and finally closed at $9,157/mt, down 0.86%. Trading volume reached 18,000 lots, and open interest was 299,000 lots. The most-traded SHFE 2409 copper contract opened at 74,840 yuan/mt overnight, initially declining to a session low of 74,530 yuan/mt before rebounding to a session high of 75,200 yuan/mt, and finally closed at 75,000 yuan/mt, down 0.42%. Trading volume reached 56,000 lots, and open interest was 180,000 lots. Macro side, LME copper stocks increased to 236,700 mt as of this Tuesday, the highest level since September 2021, heightening market concerns about consumption. Additionally, market expectations of a higher probability of Trump's election success are seen as favorable for the dollar, pushing the US dollar index higher and suppressing copper prices. Fundamentals side, due to the continuous decline in copper prices, downstream buyers adopted a wait-and-see stance for fear of further price drops, leading to a decrease in procurement demand. If copper prices stabilize, consumption may slightly rebound. Price-wise, copper prices are expected to remain under pressure.

Aluminum

Market: The most-traded SHFE aluminum 2409 contract opened at 19,340 yuan/mt overnight, reaching a high of 19,410 yuan/mt and a low of 19,310 yuan/mt, and closed at 19,350 yuan/mt, up 60 yuan/mt, a decrease of 0.31%. The previous trading day, LME aluminum opened at $2,319/mt, hit a high of $2,327/mt and a low of $2,293/mt, and closed at $2,298.5/mt, down $16/mt, a decrease of 0.69%.

Summary: On the macro front, expectations for a rate cut in Europe have strengthened, and China has lowered the one-year and five-year LPR, resulting in ample market liquidity. On the fundamentals, domestic aluminium supply continues to grow, with a significant YoY increase in net imports of primary aluminium. However, downstream aluminum processing and end-user demand have entered the off-season, and the operating rate in the aluminum processing industry has hit a low. Social inventory is at a three-year high for the same period, and spot discounts are expected to persist in the short term. In the short term, aluminum fundamentals remain relatively stable, continuing to exert downward pressure on aluminum prices, while macro fluctuations are relatively large. It is crucial to focus on the impact of macro changes on aluminum prices in the short term.

Lead

Overnight, LME lead opened at $2,087/mt. With the strengthening of the dollar and concerns over demand, LME lead's decline widened compared to the previous trading day. Especially during the European session, LME lead inventory surged by over 40,000 mt, causing the trading focus of LME lead to continue to shift downward. LME lead reached a low of $2,050/mt, once again hitting a new low since April 3, 2024, and eventually closed at $2,054/mt, down 1.6%.

Overnight, the most-traded SHFE 2409 lead contract opened at 19,025 yuan/mt. The impact of domestic supply resumption and import expectations continued to ferment, causing SHFE lead to plummet quickly after the opening. SHFE lead hit a low of 18,780 yuan/mt, a new one-month low. In the latter part of the trading session, the tug-of-war between bulls and bears intensified, and SHFE lead recovered part of its losses, eventually closing at 18,965 yuan/mt, down 0.68%. The open interest reached 126,000 lots, an increase of 6,660 lots compared to the previous trading day.

Zinc

Overnight, LME zinc opened at $2,729/mt. After a brief rise at the beginning of the session, it peaked at $2,751/mt. Subsequently, as funds exited, LME zinc fluctuated downward, hitting a low of $2,667/mt during the night session. It then moved up to consolidate around $2,730/mt and finally closed lower at $2,702.5/mt, down $32/mt or 1.17%. Trading volume reduced to 13,569 lots, and open interest decreased by 2,431 lots to 220,000 lots. Overnight, LME zinc recorded a bearish candlestick, with LME zinc inventory increasing by 1,650 mt to 247,425 mt, an increase of 0.67%. Fundamentals show that LME inventory continues to rise. Although the supply of raw materials remains tight, actual demand is relatively average. With tight raw materials but ample ingot supply, LME zinc continued to decline and is expected to remain weak today.

Overnight, the most-traded SHFE zinc 2409 contract opened at 23,000 yuan/mt. At the beginning of the session, SHFE zinc quickly dipped to 22,805 yuan/mt. Subsequently, as shorts reduced their positions, SHFE zinc fluctuated upward, peaking at 23,060 yuan/mt, and finally closed lower at 23,020 yuan/mt, down 75 yuan/mt or 0.32%. Trading volume reduced to 103,000 lots, and open interest increased by 3,976 lots to 99,808 lots. Overnight, SHFE zinc recorded a bullish candlestick. The fundamental supply and demand pattern remains weak, with tight raw material supply still providing support for SHFE zinc. SHFE zinc opened low and moved higher, but it is expected to remain weak today.

Tin

In the night session yesterday, the SHFE tin most-traded contract closed at 247,820 yuan/mt, down 2,930 yuan/mt, a decrease of 1.17%. The highest price was 248,600 yuan/mt, and the lowest was 244,280 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 premiums of 0-300 yuan/mt over SHFE 2408 tin contract, versus premiums of 500-1,000 yuan/mt for delivery brands and premiums of 1,000-1,200 yuan/mt for Yunxi brand. In the morning session yesterday, SHFE tin prices slightly increased before falling back, and the market's available supply continued to decline. The spot market's tin ingot premiums and discounts slightly increased. Overall, the spot market remained active yesterday, but downstream procurement enthusiasm declined.

Nickel

On July 23, Jinchuan nickel was quoted at a premium of 1,800-2,000 yuan/mt, with an average of 1,900 yuan/mt, a decrease of 50 yuan/mt compared to the previous trading day. Norilsk nickel was quoted at a premium of 0-200 yuan/mt, with an average price of 100 yuan/mt, an increase of 50 yuan/mt compared to the previous trading day. In the morning, as the market fluctuated downward, spot premiums saw a slight increase. Nickel briquette prices were 127,000-127,200 yuan/mt, an increase of 200 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 2,445 yuan/mt (nickel sulphate prices were 2,645 yuan/mt higher than nickel briquette prices).