SMM Morning Comment For SHFE Base Metals On June 12

SHANGHAI, June 12 (SMM) –

Copper

Overnight, LME copper opened at $9,693.5/mt, initially dropped to $9,680/mt, then fluctuated upwards, hitting a high of $9,816.5/mt during the session, and finally fluctuated widely to close at $9,805/mt, with a drop of 0.77%. Trading volume rose to 25,000 lots, and open interest stood at 332,000 lots. Overnight, the most-traded SHFE copper contract (2407) opened at 79,390 yuan/mt, initially hit a high of 79,700 yuan/mt, then fluctuated downwards to a low of 79,130 yuan/mt, hovered sideways during the session, and rebounded at the end to close at 79,530 yuan/mt, with a drop of 0.7%. Trading volume rose to 44,000 lots, and open interest stood at 172,000 lots. On the macro front, the World Bank revised the global GDP growth forecast for 2024 from 2.4% to 2.6% and the US GDP growth forecast from 1.6% to 2.5%. The strengthening US dollar inhibited copper prices. Additionally, the market is paying attention to the US CPI data to be released tonight and the interest rate decision early Thursday morning. In terms of fundamentals, copper prices fell, leading to a rebound in purchasing volumes from downstream processing enterprises, but some remain in a wait-and-see sentiment, resulting in relatively limited overall demand recovery. The market is watching whether copper prices will continue to decline in the future. SMM learned that as of Tuesday, June 11, copper stocks in mainstream areas of China fell by 8,600 mt MoM to 442,100 mt, still 98,400 mt higher YoY, mainly due to an increase in cargo pick-up by downstream enterprises. The prices are expected to run at a relatively low level.

Aluminum

The most-traded SHFE 2407 aluminum contract opened at 20,820 yuan/mt, reaching a high of 20,900 yuan/mt and a low of 20,730 yuan/mt, and closed at 20,800 yuan/mt, down 105 yuan/mt, a drop of 0.5%. The previous trading day, LME aluminum opened at $2,575.5/mt, reached a high of $2,589/mt, a low of $2,529/mt, and closed at $2,544/mt, down $38/mt, a drop of 1.47%.

Summary: On the macro level, the postponement of US Fed interest rate cut expectations resulted in a short-term pullback in aluminum prices, but interest rate cuts by the European Central Bank and others provided support for commodities. On the fundamentals, the domestic aluminum market supply and demand relationship is gradually weakening, with both aluminum ingot and aluminum billet social inventory increasing. In the short term, aluminum prices are under pressure, and are expected to hover around at a high level.

Lead

Overnight, LME lead opened at $2,212.5/mt. Under the dual pressure of the strength of the US dollar and the gradual accumulation of lead inventory, LME lead continued its downward trend throughout the day. During the Asian session, influenced by the resilience of SHFE lead, LME lead managed to stay above $2,200/mt. However, entering the European session, the inventory pressure increased, leading to a sharp decline in LME lead, reaching a lowest point of $2,154/mt, a one-and-a-half-month low. LME lead eventually closed at $2,169.5/mt, a drop of 1.79%.

Overnight, the most-traded SHFE lead contract (2408 contract) opened at ¥18,630/mt. Close to the delivery date, the SHFE lead warrants increased, and with the lead ingot import window about to open, potentially altering the domestic supply tightness. SHFE lead fluctuated downward, reaching a lowest point of ¥18,505/mt, a half-month low. SHFE lead eventually closed at ¥18,575/mt, a drop of 0.93%; open interest stood at 80,642 lots, an increase of 6,076 lots from the previous trading day.

Zinc

Overnight, LME zinc opened at $2,845/mt, hitting a high of $2,863/mt during the session. Entering the European trading session, the exit of capital led to a quick drop in LME zinc, shifting lower to fluctuate around $2,790/mt, and hit a low of $2,767/mt during the night session, finally closing at $2,786/mt, down $64.5/mt, with a drop of 2.26%. Trading volume increased to 15,831 lots, and open interest decreased by 2,518 lots to 235,000 lots. LME zinc inventory fell by 600 mt to 259,350 mt, a drop of 0.34%. The continued strengthening of the US dollar inhibited the performance of non-ferrous metals, which generally declined, together with weak domestic demand, LME zinc is expected to perform relatively poorly.

Overnight, the most-traded SHFE zinc contract (2408) opened at 23,455 yuan/mt, briefly hit a high, then with the increase in positions by shorts, SHFE zinc fluctuated downwards, shifting lower to fluctuate around 23,470 yuan/mt, finally closing at 23,445 yuan/mt, down 245 yuan/mt, with a drop of 1.03%. Trading volume increased to 51,376 lots, and open interest increased by 1,815 lots to 77,943 lots. With a bearish macro sentiment, the continued strengthening of the US dollar, and lower-than-expected domestic and overseas PMI data, coupled with no improvement in domestic demand, SHFE zinc is expected to perform relatively poorly.

Tin

Overnight, the most-traded SHFE tin contract closed at 264,950 yuan/mt, falling 20 yuan/mt or 0.01%. The highest was 265,200 yuan/mt, and the lowest was 263,040 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 0-100 yuan/mt over SHFE 2407 tin contract, versus discounts of 300 yuan/mt to premiums of 500 yuan/mt for delivery brands, and premiums of 300-800 yuan/mt for Yunxi brand. Tin prices swung on a soft note. Downstream companies, mostly having stocked up enough raw materials earlier, barely showed any purchasing interest. Yesterday, SHFE tin warrants decreased by 114 mt to 15,540 mt, while LME tin inventory increased by 25 mt to 4,820 mt.

Nickel

On June 11, Jinchuan nickel was at a premium of 2,400-2,800 yuan/mt, with an average of 2,600 yuan/mt, up 450 yuan/mt compared to the previous trading day. Russian nickel was at a discount of 0-330 yuan/mt, with an average of 150 yuan/mt, up 100 yuan/mt compared to the previous trading day. In the morning, the market continued to decline. The downward movement in raw material prices resulted in downstream demand, with the spot market trades warming up. The shortage of electro-deposited nickel in the spot market continued, and spot premiums and discounts of various brands surged. Nickel briquette prices were 136,100-136,900 yuan/mt, down 3,000 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 11,909 yuan/mt (nickel sulphate prices were higher than nickel briquette prices by 11,909 yuan/mt).