Platinum prices continued to consolidate today. Although rate hike expectations had cooled somewhat, the market-priced probability of a September rate hike remained around 50%, and the market focused on further guidance from this week's US CPI data. In the morning session, the most-traded GFEX platinum futures contract, PT2610, closed at 437 yuan/g, up 0.59%. The best ask price for platinum 9995 on the Shanghai Gold Exchange was inverted by around 1 yuan/g against the GFEX PT2610 contract. Spot market, mainstream quotations for platinum were at discounts of 3.5 yuan/g to 2.5 yuan/g against the PT2610 contract, with relatively large quotation differences. Downstream consumption remained weak, with just-in-time procurement as the main mode. The discounts on mainstream quotations were basically flat with yesterday. As futures prices rose continuously, some unhedged cargoes appeared in the market with lower quotations. Today, overall consumption in the platinum spot market remained sluggish.

[Divergence over Middle East situation persists, short-term aluminum prices to hold up well] Overall forecast, divergence over the Middle East situation persists, the US Fed did not raise interest rates in July, but its overall stance remains hawkish, the fundamental deficit continues, aluminum ingot inventory keeps destocking, and short-term aluminum prices are expected to consolidate on a strong note.

Next week, the key macroeconomic data will include the US July unadjusted CPI YoY rate, July retail sales MoM rate, and preliminary August one-year inflation expectations. On the geopolitical front, tensions in the Middle East have eased. According to US media, Iran and Oman have reached a temporary agreement on the Strait of Hormuz issue; meanwhile, US President Trump again stated that military operations against Iran may end soon. In addition, the US will release several economic indicators next week, and markets will continue to monitor statements from Fed officials on future monetary policy. In the short term, the macro front remains highly uncertain, providing limited support for base metal prices. On the LME lead front, suppliers in markets outside China have been actively picking up goods recently, with LME lead inventory dropping by over 16,000 mt this week. However, considering the current overseas lead consumption situation, the supply shortage is mainly concentrated in 4N lead, while 3N lead trading remains sluggish. The market widely views this destocking as a result of inventory transfers rather than improvement in end-use consumption. Meanwhile, LME lead Cash-3M contango widened further to -$47.56/mt, also reflecting that expectations for spot consumption improvement remain limited. Attention should still be paid to developments in the Middle East and the Fed's monetary policy impact on the base metal market. Next week, LME lead is expected to continue its range-bound consolidation, trading at $1,870-1,915/mt. For SHFE lead, the accumulation of lead ingot social inventory is a normal phenomenon ahead of SHFE lead delivery. As delivery approaches next week, suppliers are expected to further increase shipments to delivery warehouses, and visible inventory may continue to rise, exerting some pressure on lead prices in the short term. However, on the supply side, maintenance shutdowns at major primary lead delivery brand smelters are gradually starting, which could become an important factor supporting lead prices in mid-to-late August. The most-traded SHFE lead contract is expected to dip first and then stabilize and rebound, with a trading range of 15,450-15,900 yuan/mt. Spot lead price forecast: 15,400-15,650 yuan/mt. In the short term, downstream lead-acid battery enterprises are seeing both production recovery and output cuts, and consumption improvement remains limited, providing insufficient support for lead prices. On the supply side, maintenance shutdowns at primary lead smelters are increasing, and market availability of goods is expected to tighten gradually, with primary lead spot cargo likely to maintain a slight premium. If lead prices gradually recover, secondary lead enterprises' losses are expected to be repaired, and smelters' willingness to sell may pick up accordingly, with secondary refined lead trading at a discount likely to increase.

SMM August 7 – In early trading, the center of the SHFE aluminum 2608 contract continued to rise notably from yesterday, but with continuous destocking and a widening Contango structure, most suppliers were unwilling to lower prices, and actual transaction prices for A00 aluminum ingots were at a discount of 40-20 yuan/mt against the August contract. Today, the selling sentiment index in east China was 3.15, up 0.02 day-on-day; the buying sentiment index was 3.09, up 0.13 day-on-day. Aluminum futures continued to rise, and with Friday's stockpiling cycle in the central China market, buying sentiment from downstream processing enterprises remained subdued. Trading firms engaged in both spot and futures markets made large purchases, and given the wide discount, major suppliers' inclination to hold prices firm and hold back from selling grew increasingly notable, driving a steady improvement in premiums and discounts in the market. Ultimately, actual transaction prices in the central China market were in the range of a discount of 120-160 yuan/mt against the SHFE August contract. Today, the selling sentiment index in central China was 3.01, up 0.04 day-on-day; the buying sentiment index was 2.97, up 0.01 day-on-day. On the inventory front, aluminum ingot inventories in major consumption areas decreased by 8,500 mt day-on-day, with Guangdong, Wuxi, and Gongyi all showing destocking.

[SMM Analysis: Cost Support and Demand Constraints Coexist, ADC12 Consolidates at Highs Awaiting Peak Season Breakthrough] Entering August, ADC12 prices are expected to continue to consolidate at highs. Cost side, currently tight supply of aluminum scrap and high tax invoice compliance costs...

[Weekly Review on Aluminum Scrap and Secondary Aluminum: ADC12 Price Moves Sideways at High Levels as Cost Support Overlaps with Demand Constraints] This week, China’s aluminum scrap market prices were relatively stable, and the price difference between A00 aluminum and aluminum scrap widened again against the backdrop of aluminum scrap struggling to catch up. On the price side, driven by macro and capital sentiment, primary aluminum prices continued to rise. As of August 6, SMM A00 aluminum price closed at 23,800 yuan/mt, significantly up by 170 yuan/mt compared to last Thursday, while aluminum scrap raw material prices showed limited fluctuations overall.

[SMM Cast Aluminum Alloy Morning Comment: Contract Hits New Stage High, Aluminum Alloy Market Consolidates at Highs, Drifting Higher] Overnight, the aluminum alloy 2610 contract opened at 23,435 yuan/mt, shot up to 23,540 yuan/mt, hitting a new stage high, then pulled back to a low of 23,380 yuan/mt, and closed at 23,450 yuan/mt, up 20 yuan, or 0.09%, from the settlement price.

Next week, key macroeconomic data include the US July ISM Manufacturing PMI, ADP employment change, unemployment rate, and seasonally adjusted nonfarm payrolls. As recent cooling inflation has dampened rate hike expectations, the US dollar index consolidates around the $100 level, with market awaiting guidance from employment data. Additionally, Iran rejected a proposal for joint management of the Strait of Hormuz, and the US announced the completion of a new round of military operations targeting Iranian objectives, reigniting market concerns over easing geopolitical conflicts. For LME lead, LME lead inventory continued its downward trend, while LME lead Cash-3M contango widened further, with the latest quote at -$41.15/mt. Currently, geopolitical conflict risks persist outside China; lead consumption in the Middle East shows no recovery expectations, while lead consumption in Southeast Asia is steadily rising with spot premiums climbing again. Lead ingot (Pb≥99.99%) CIF premium was quoted at a super high $240/mt, which will support an upward shift in lead price center to some extent. Next week, LME lead is expected to trade at $1,880-1,925/mt. For SHFE lead, there are no expectations for improvement in lead consumption in August yet. Cautious procurement by downstream enterprises and accumulating lead ingot inventory have dragged lead prices to consolidate on a subdued note. Meanwhile, increased maintenance and production cuts at primary and secondary lead smelters, along with supply tightening expectations, have narrowed spot lead discounts, providing strong support for lead prices. Next week, the most-traded SHFE lead contract is expected to trade at 15,500-15,850 yuan/mt. Spot lead price forecast: 15,350-15,600 yuan/mt. Entering August, a new round of delivery for SHFE lead is on the agenda, with lead ingots moving from smelter warehouses to social warehouses. Market supply of circulating cargo is expected to decrease, and suppliers' willingness to sell at discounts may further decline. If lead prices continue to consolidate at lows, spot premiums for both primary and secondary lead are expected to persist.

As of July 28, LME zinc inventories (including off-warrant stocks) had fallen to 119,600 mt, down by approximately 45,000 mt from mid-June. As overseas inventories continued to decline, the LME zinc market structure shifted from contango to backwardation, with the backwardation widening further. By July 28, the LME zinc cash-to-3M spread had strengthened to US$61.09/mt.

[Zinc Ingot Export Window Opening? A Nearly 20-Year Rare Opportunity Reemerges!] As of July 28, LME zinc inventory (including non-registered warrants) had pulled back to 101,800 mt, down about 20,000 mt from mid-June. Amid continued destocking outside China, the LME zinc market structure shifted from contango to backwardation, and the backwardation structure kept widening. On July 28, the LME zinc Cash-3M spread strengthened to $61.09/mt. In stark contrast, zinc consumption in China remained in the traditional off-season, with SMM-reported social inventory of zinc ingots across seven domestic markets holding steady at a high level of around 260,000 mt. The supply-demand patterns in China and overseas clearly diverged, and the SHFE/LME zinc price ratio weakened all the way. Against this backdrop, the long-dormant export window for Chinese zinc ingots reappeared, and discussions in the market about reverse arbitrage involving "buying SHFE zinc, selling LME zinc" noticeably heated up...