SMM Morning Comments (Jul 6): Copper, Zinc and Lead Prices Showed Mixed Trends Overnight

SHANGHAI, Jul 6 (SMM) –Copper, Zinc and lead prices showed mixed trends overnight

Copper: LME copper prices closed with a drop of 0.44% at $8,322.5/mt last evening. Trading volume stood at 14,000 lots. Open interest stood at 256,000 lots. The most active SHFE 2308 copper contract finished at 67,950 yuan/mt overnight, up 0.07%. Trading volume was 26,000 lots and open interest stood at 190,000 lots. On the macro front, the minutes of the Federal Reserve's meeting last month showed that almost all officials expected more interest rate hikes in 2023 and said the Fed's future actions would also depend on data, but no decision has been made on the next meeting. In terms of fundamentals, due to the impact of low-priced shipments by importers in east China, spot quotes plunged. Copper prices are still running at a high level, which still suppresses downstream demand. It is expected that east China will be affected by imported copper sources in the short term, which will prevent spot premiums from rising. Inventory in south China has dropped for 4 consecutive days, mainly due to the lack of arrivals. Given weak downstream buying interest, some sellers took profit and lowered prices, pushing down spot premiums. In terms of consumption, if copper prices do not fall, demand will hardly improve. Copper prices are still mainly guided by macro sentiment, and will be mainly affected by US interest rate hike in July in the short term.

Zinc: LME zinc price slid overnight.

Overnight, SHFE zinc market closed with a slight gain. The SHFE/LME zinc price ratio remained high at 8.5-8.7, and profits of imported zinc concentrates remained stable at 500 yuan/mt, luring domestic smelters to procure long-term imports. In addition, rising TCs continuously lifted smelters’ production profits. Bolstered by elevated profits, supply of zinc ingots appeared stable-to-strong, and zinc price gained little supports from fundamentals.

Lead: LME lead opened at $2,090/mt overnight, and kept dipping on rising US dollar index, with a low of $2,062/mt, and finally closed down 1.17%, at $2,065.5/mt.

The most-traded SHFE 2308 lead contract was opened at 15,495 yuan/mt overnight, and trended lower to 15,485 yuan/mt after hitting a high of 15,580 yuan/mt, but finally closed up 0.26%, at 15,520 yuan/mt.

On the macro level, suppressed by weak US manufacturing data, non-ferrous metals swung in bearishness, seeing LME lead falling below $2,100/mt.

 [Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]