1．Shanghai Base Metals Largely Went Up after Eased US CPI Increase.

  Shanghai base metals all trended higher on Thursday morning boosted by the eased increase in US CPI. Meanwhile, their counterparts on LME trended mixed.

LME metals basically went up in the trade on Wednesday. Copper rose 0.24%, lead won 0.94%, and zinc increased 1.57%, while aluminium dipped 0.04%.

SHFE metals performed similarly in the overnight trading. Copper gained 0.2%, aluminium inched up 0.07%, and lead rose 0.32%, while zinc slid 0.82%.

Copper: Three-month LME copper rose 0.24% to end at $9,535/mt on Wednesday night, and is expected to trade between $9,490-9,580/mt today.

The most liquid SHFE 2109 copper contract gained 0.2% to settle at 70,060 yuan/mt last night, and is likely to trade between 69,800-70,400 yuan/mt today, with spot premiums between 120-200 yuan/mt.

The increase in US consumer price index (CPI) eased for July, which urged Fed to take measures to relieve the inflationary pressure. The pandemic outbreak in US hampered the economic recovery, and market expectations of the Fed’s tapering bond purchase declined. US dollar index fell sharply overnight, boosting copper futures. In the spot market, premiums and discounts were at a stalemate. Spot holders intended to raise premiums amid high costs, while traders made little purchase due to low profits. Downstream users maintained purchase on rigid demand.

Aluminium: Three-month LME aluminium dipped 0.04% to end at $2,585/mt on Wednesday.

The most active SHFE 2109 aluminium contract inched up 0.07% to close at 20,130 yuan/mt last night.

The improved transportation in the short term may increase the arrivals of aluminium ingots, and the decline in social inventories will narrow. However, the power curtailment will gradually restrict the supply in the medium to long term, and the social inventories are hard to increase. In addition to the power curtailment and pandemic, the import volume of aluminium ingot and the released national reserves are worth attention. SHFE aluminium is expected to fluctuate around 20,000 yuan/mt today.

Lead: Three-month LME lead won 0.94% to end at $2,318/mt on Wednesday night. The falling US dollar drove up LME metals. Lead stocks across LME-listed warehouses fell 475 mt to 57,850 mt. Whether the prices can stabilise above the 5-day moving average is worth attention.

The most traded SHFE 2109 lead contract rose 0.32% to settle at 15,505 yuan/mt in the overnight trading. Whether the prices can remain upward and test the 5-day moving average will be the focus today.

Zinc: Three-month LME zinc increased 1.57% to end at $3,051/mt last night, with open interest down 751 lots to 249,000 lots. Zinc stocks across LME-listed warehouses dropped by 1,725 mt or 0.69% to 246,525 mt. The growth in US CPI slowed down in July, and the market believed that the inflation may peak as the economy adapted to the interrupted supply chain caused by the pandemic. The cancelled LME zinc warehouse receipts increased by 21,500 mt, a new high since 2018, triggering a lot of speculation in the market. The monthly rate of industrial output in the Eurozone in June and the US weekly initial jobless claims in the week ended August 7 will be the focus. LME zinc is expected to fluctuate between $3,010-3,060/mt today.

The most-liquid SHFE 2109 zinc contract slid 0.82% to settle at 22,650 yuan/mt in the overnight trading, with open interest up 13,000 lots to 155,000 lots. July’s financial data fell across the board overnight, reflecting a slight cooling in domestic economic activity in July. The output of zinc ingot declined on the month due to the continuous power curtailment, and the domestic zinc ingot inventories stood low. Zinc was favoured by funds amid the short-term contradiction between the supply and demand. zinc prices performed strongly with higher open interest. The SHFE 2109 contract is expected to move between 22,400-22,800 yuan/mt today, and spot premiums for domestic 0# Shuangyan zinc will be seen at 150-160 yuan/mt against the September contract.

Tin: The most traded SHFE 2109 tin contract closed higher at around 232,200 yuan/mt last night.

At fundamentals, the recent low spot inventories and warehouse receipts were still supporting the prices. Bull and bears both re-entered the market after trimming, indicating the two sides had different output on the price trend. The trend will be affected by the short funds’ response strategy in the unfavourable situation. The prices are likely to trade with the support at 240,000 yuan/mt today, with the pressure level unclear.