SMM Morning Comments (Jun 28): Base Metals Closed Mostly With Mixed Trends

SHANGHAI, Jun 28 (SMM) –LME and SHFE zinc prices showed mixed trends

Zinc: Overnight, LME zinc price made gains. LME zinc inventories decreased by 350 mt, or 0.45%, to 78,250 mt. Overnight, market sentiment improved on higher-than-expected the US consumer information index and annualized total new home sales. Fundamentally, Newmont launched a strike at the Company’s Peñasquito mine in Mexico, thereby disrupting production.  

SHFE zinc market closed with a small dip overnight, but support from the 40-day moving average was monitored. SHFE zinc price hovered around 20,000 yuan/mt, and the market sentiment picked up. However, there was limited support from fundamental.

Lead: Overnight, LME lead opened at $2,073.5/mt, and trended higher amid waning impact of the US dollar index, with its high of $2,114.5/mt, and finally closed up 1.04% at $2,097/mt.

The most-traded SHFE 2308 lead contract opened at 15,470 yuan/mt overnight, and trended lower to 15,445 yuan/mt on increased lead warrant inventory, and finally closed down 0.1% at 15,475 yuan/mt after hovering around 15,470yuan/mt on insufficient waste battery supply. Open interest dropped by 415 lots to 107,000 lots.

On the macro front, the number of new home sales in the US unexpectedly jumped by 12.2% in May, and the important housing price index rose month-on-month for three consecutive months. Orders for durable goods in May increased on the month, and the Conference Board Consumer Confidence Index in June rose to nearly a year and a half high. The European Central Bank continued to release hawkish signals, and President Lagarde said that interest rates will be raised in July.

Aluminium: The most-traded SHFE 2308 aluminium contract opened at 18,165 yuan/mt at night trading session of June 27, with its low at 18,050 yuan/mt and a high of 18,180 yuan/mt, and closed up 110 yuan/mt, or 0.61%, at 18,070 yuan/mt.

LME aluminium opened at $2,147/mt, with its low and high at $2,147/mt and $2,202/mt respectively before closing at $2,192.5/mt, a rise of $42.5/mt or 1.98%.

Remarks by Chinese premier boosted confidence in Chinese economic recovery. But expectations for US interest rate hike will pose resistance to upward momentum of aluminum prices. Production resumption in Yunnan will also grow supply pressure. Aluminum ingot and billet stocks both rose after the Dragon Boat Festival. Aluminum prices are at downside risks, but low inventories may limit the decline.

Tin: Overnight, SHFE 2307 tin contract rose rapidly to 215,200 yuan/mt and then fell back a little and moved sideways, closing up 1.54% at 214,140 yuan/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.]