SMM Morning Comment For SHFE Base Metals On June 25

SHANGHAI, June 25 (SMM) –

Copper

Overnight, LME copper opened at $9,673/mt, reaching a high of $9,728/mt, then touching a low of $9,640.5/mt, and finally closed at $9,644/mt, down 0.37%. Trading volume reached 14,000 lots, and open interest reached 323,000 lots. Overnight, the most-traded SHFE copper 2408 contract opened at 78,740 yuan/mt, reaching a high of 78,340 yuan/mt, then touching a low of 79,130 yuan/mt, and finally closed at 78,800 yuan/mt, up 0.04%. Trading volume reached 35,000 lots, and open interest reached 171,000 lots. On the macro front, several US Fed officials delivered speeches, but there is still no clear conclusion on when the Fed will cut interest rates. Additionally, LME Asian inventories continued to increase, putting pressure on copper prices. On the fundamentals side, downstream demand weakened again as copper prices rebounded, forcing suppliers to sell at low prices, but downstream buyers mainly restocked based on rigid needs. Furthermore, imported copper is expected to concentratedly arrive at ports by the end of June, which is anticipated to have some impact on the spot market. Overall, the weak demand is unlikely to change in the short term, while spot supply remains ample. Copper prices are expected to maintain wide fluctuations.

Aluminum

Overnight, the most-traded SHFE aluminum contract 2408 opened at 20,395 yuan/mt, reaching a high of 20,470 yuan/mt and a low of 20,330 yuan/mt, and closed at 20,350 yuan/mt, down 45 yuan/mt, a decrease of 0.22%. The previous trading day, LME aluminum opened at $2,510.5/mt, hit a high of $2,531/mt and a low of $2,495.5/mt, and closed at $2,497.5/mt, down $16/mt, a decrease of 0.64%.

Summary: On the macro front, the US Fed's June comprehensive S&P Global PMI index was better than expected. Domestically, multiple rural homestead policies were introduced, and the National Development and Reform Commission, along with other departments, issued new consumption measures to further expand domestic demand. On the fundamentals, domestic aluminum capacity remained at a high level. Boosted by the rebound in aluminium billet conversion margins, the aluminum liquid alloying ratio increased, and the ingot production in the industry decreased. According to the SMM survey, new orders in industries such as photovoltaics and automobiles were not ideal, and the operating rate of aluminum processing enterprises is expected to remain sluggish in the short term. Given the weak macro front, together with the weakening trend in downstream consumption expectations, market sentiment remains cautious. SMM expects aluminum prices to show a wide range of fluctuations in the short term.

Lead

Overnight, LME lead opened at $2,187.5/mt. With overseas lead inventories declining, it touched a high of $2,201.5/mt during the Asian session before fluctuating around the daily moving average. Entering the European session, LME lead rose slightly before plunging to a low of $2,161/mt, and closed at $2,163/mt, down by 1.05%.

Overnight, the most-traded SHFE lead 2408 contract opened at 18,890 yuan/mt. Initially, it rose to a high of 18,970 yuan/mt due to declining domestic and overseas lead inventories, but later, dragged down by the decline in LME lead, it plunged to a low of 18,820 yuan/mt, and closed at 18,845 yuan/mt, up by 0%.

Zinc

Overnight, LME zinc opened at $2,854.5/mt, dipping to $2,831/mt, then reaching a high of $2,886.5/mt, and closed at $2,846.5/mt, down $11.5/mt or 0.4%. Trading volume increased to 6,192 lots, and open interest decreased by 490 lots to 231,000 lots. Overnight, LME zinc recorded a small bearish candlestick, with the 60-day moving average forming resistance above and the 10-day moving average providing support below. Overnight, LME inventory decreased by 2,125 mt to 240,400 mt, a drop of 0.88%, reaching a four-month low. LME zinc maintained range-bound fluctuations overnight, with no significant macro news for guidance. Fundamentally, with overseas smelters increasing production, inventory continued to decline. Zinc prices are expected to continue fluctuating, awaiting more news for guidance.

Overnight, the most-traded SHFE zinc 2408 contract opened at 23,805 yuan/mt, reaching a high of 23,920 yuan/mt, then dropping to around 23,575 yuan/mt, and eventually closed at 23,585 yuan/mt, down 185 yuan/mt or 0.78%. Trading volume decreased to 92,590 lots, and open interest increased by 1,470 lots to 93,510 lots. Overnight, SHFE zinc recorded four consecutive bearish candlesticks, with the KDJ indicator narrowing. Weak demand played out, with SMM zinc inventory in seven major regions accumulating by 3,500 mt to 193,800 mt. As social inventory increased again, SHFE zinc prices ran weak.

Tin

Last night, the most-traded SHFE tin futures contract closed at 272,360 yuan/mt, down 320 yuan/mt, a decrease of 0.12%. The highest price was 275,580 yuan/mt, and the lowest was 271,200 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 premiums of 0-500 yuan/mt for delivery brands and premiums of 600-800 yuan/mt for Yunxi brand. Yesterday morning, SHFE tin prices fluctuated upwards, and most downstream producers adopted a wait-and-see attitude. Overall, the spot market transactions were relatively quiet yesterday.

Nickel

On June 24, Jinchuan nickel was at a premium of 2,300-2,700 yuan/mt, with an average of 2,500 yuan/mt, flat compared to the previous trading day. Russian nickel was at a discount of 200 yuan/mt to a premium of 100 yuan/mt, with an average discount up 50 yuan/mt to 50 yuan/mt. In the morning, the market fluctuated at recent lows. On the other hand, electro-deposited nickel continued to experience shortages in the spot market, and premiums and discounts for various brands remained firm. Nickel briquette prices were 131,900-132,200 yuan/mt, down 1,425 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 905 yuan/mt (nickel sulphate prices were 905 yuan/mt higher than nickel briquette prices).