SMM Morning Comment For SHFE Base Metals On June 18

SHANGHAI, June 18 (SMM) –

Copper

Overnight, LME copper opened at $9,645/mt, initially dropped to a session low of $9,587/mt, then fluctuated upwards, reaching a session high of $9,696.5/mt at the end of trading, and finally closed at $9,693.5/mt, with a decrease of 0.81%. Trading volume reached 20,000 lots, and open interest reached 333,000 lots. Overnight, the most-traded SHFE copper contract (2407) opened at 78,030 yuan/mt, initially dropped to a session low of 77,890 yuan/mt, then maintained an upward trend throughout the session, reaching a session high of 78,590 yuan/mt, and finally closed at 78,510 yuan/mt, with a decrease of 0.47%. Trading volume reached 34,000 lots, and open interest reached 166,000 lots. On the macro front, US Fed officials emphasized continued reliance on data, stating that bringing inflation down to the Fed's target is a long process, putting slight pressure on copper prices. Domestically, the NBS announced that the value-added of industrial enterprises above designated size increased by 5.6% YoY in May, and the total retail sales of consumer goods increased by 3.7% YoY in May. Meanwhile, an NBS spokesperson stated that since mid-May, there have been some positive changes in the real estate market, which is still in the adjustment process. It is expected that China's CPI will continue to rise moderately in the future, and the YoY decrease in PPI will continue to narrow. On the fundamentals, on the supply side, overall arrivals decreased over the weekend. On the consumption side, as the delivery date approaches, most sellers have started quoting next month's prices, but only a few downstream producers are restocking at lower prices, with no significant improvement in demand. As of Monday, June 17, SMM national mainstream copper stocks decreased sharply by 27,700 mt from last Thursday to 401,600 mt, rapidly declining from the year's high. Overall, market concerns about weak domestic demand may lack support for copper prices.

Aluminum

Overnight, the most-traded SHFE 2407 aluminum contract opened at 20,240 yuan/mt, reached a high of 20,380 yuan/mt, a low of 20,230 yuan/mt, and closed at 20,350 yuan/mt, up 70 yuan/mt, an increase of 0.35%. The previous trading day, LME aluminum opened at $2,519.5/mt, reached a high of $2,523.5/mt, a low of $2,476.5/mt, and closed at $2,507.5/mt, down $15.5/mt, a decrease of 0.61%.

Summary: On the macro level, the US Fed's stance on rate cuts has been wavering, and the expectation of rate cuts within the year has weakened. Escalating regional conflicts provided support for the prices of safe-haven assets like gold and major commodities like crude oil. On the fundamentals, the arrival of the off-season together with increasing overseas market frictions led to insufficient orders for aluminum processing enterprises and a reduction in operating rates, heightening market concerns about downstream aluminum demand. After the withdrawal of long funds, aluminum prices adjusted to a low level.

Lead

Overnight, LME lead opened at $2,146/mt, slightly consolidated around the daily moving average during the Asian session, then fluctuated downwards to a session low of $2,141/mt during the European session, rebounded to a session high of $2,177/mt, and slightly pulled back before closing, ending at $2,460/mt, up $7.5/mt, or 0.35%. Overnight, the most-traded SHFE lead contract (2408) opened at 18,655 yuan/mt, initially rose to a session high of 18,950 yuan/mt, then fell back to consolidate around the daily moving average, and finally closed at 18,905 yuan/mt, up 285 yuan/mt, or 1.53%.

Zinc

Overnight, LME zinc opened at $2,786/mt, initially declined to a session low of $2,757.5/mt, then quickly rebounded to a session high of $2,829/mt, and finally closed at $2,819/mt, up $29/mt, or 1.04%. Trading volume decreased to 9,735 lots, and open interest increased by 4,022 lots to 235,000 lots. Overnight, LME zinc recorded a bullish candlestick, with support from the lower Bollinger Bands. LME zinc stocks decreased by 3,250 mt to 250,950 mt, a decrease of 1.28%. The US dollar index slightly declined, but hawkish comments from US Fed officials continued, and market cautious sentiment towards rate cuts was restored, leading to fluctuating LME zinc prices.

Overnight, the most-traded SHFE zinc contract (2408) opened at 23,315 yuan/mt, initially dropped to a session low of 23,315 yuan/mt, then fluctuated narrowly around the daily moving average during the night session, reaching a session high of 23,455 yuan/mt, and finally closed at 23,395 yuan/mt, up 195 yuan/mt, or 0.84%. Trading volume decreased to 66,252 lots, and open interest increased by 2,375 lots to 84,330 lots. Overnight, SHFE zinc recorded a bullish candlestick, with support from the lower Bollinger Bands. In May, the value-added of industrial enterprises above designated size increased by 5.6% YoY, indicating stable economic operation. However, entering the off-season for consumption, the fundamentals of zinc showed no significant improvement, and SHFE zinc continued to fluctuate weakly.

Tin

The most-traded SHFE tin futures contract closed at 267,840 yuan/mt in the night session yesterday, up by 830 yuan/mt, with an increase of 0.31%. The highest price was 268,180 yuan/mt and the lowest was 263,350 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 500 yuan/mt to premiums of 300 yuan/mt over SHFE 2407 tin contract, versus premiums of 0-500 yuan/mt for delivery brands and premiums of 400-600 yuan/mt for Yunxi brand. Tin prices moved rangebound yesterday, and downstream companies restocked only as needed. Yesterday, SHFE tin warrants decreased by 7 mt to 15,549 mt, while LME tin stocks increased by 65 mt to 4,675 mt.

Nickel

On June 17, Jinchuan nickel was at a premium of 2,500-3,000 yuan/mt, with an average of 2,750 yuan/mt, down 200 yuan/mt compared to the previous trading day. Russian nickel was at a discount of 0-200 yuan/mt, with an average of 100 yuan/mt, up 50 yuan/mt compared to the previous trading day. In the morning, the market fluctuated downward, leading to a slight improvement in spot market transactions. On the other hand, the shortage of electro-deposited nickel in the spot market continued, and the premiums and discounts of various brands showed a significant upward shift. Nickel briquette prices were 135,000-135,200 yuan/mt, down 650 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 6,945.5 yuan/mt (nickel sulphate prices were 6,945.5 yuan/mt higher than nickel briquette prices).