SMM Morning Comment For SHFE Base Metals On June 20

SHANGHAI, June 20 (SMM) –

Copper

Overnight, LME copper opened at $9,780/mt, rose slightly to a session high of $9,815.5/mt at the beginning, then dropped slightly to a session low of $9,742/mt during the day. By the end of the trading session, it rebounded and closed at $9,785/mt, up 0.68%，with a trading volume of 16,000 lots and open interest of 319,000 lots. The most-traded SHFE copper contract (2407) opened at ¥79,270/mt, dropped slightly to a session low of ¥78,940/mt at the beginning, then rose to a session high of ¥79,490/mt by the end of the trading session, and finally closed at ¥79,400/mt, up 1.19%, with a trading volume of 23,000 lots and open interest of 149,000 lots. On the macro front, according to external news on June 19, the latest report from the World Bureau of Metal Statistics showed that in April 2024, the global refined copper supply shortage was 120,900 mt due to a decline in copper mine production from Anglo American. The market focus has once again shifted to supply shortages, leading to a rebound in copper prices overnight. On the fundamentals side, after the contract rollover, the premium fell back again, downstream consumption did not show significant improvement, and warrant trading also occupied some spot demand. Overall, although concerns about copper ore shortages have re-emerged, the continuous increase in copper stocks indicates weak demand, and copper prices may lack the momentum to continue rising. Today, attention will be on the interest rate decisions from China and the UK, as well as US labor data.

Aluminum

Overnight, the most-traded SHFE 2408 aluminum contract opened at 20,485 yuan/mt, reached a high of 20,585 yuan/mt, a low of 20,485 yuan/mt, and closed at 20,535 yuan/mt, up 60 yuan/mt, an increase of 0.29%. The previous trading day, LME aluminum opened at $2,495/mt, reached a high of $2,520/mt, a low of $2,484/mt, and closed at $2,489.5/mt, down $6/mt, a decrease of 0.24%.

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 have provided support for the prices of safe-haven assets like gold and major commodities like crude oil. On the fundamentals, the arrival of the consumption off-season together with increasing overseas market frictions has 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, short-term aluminum prices pulled back to a stage low.

Lead

Overnight, LME lead opened at $2,190/mt, fluctuated upwards during the Asian session, and reached a session high of $2,245/mt during the European session before consolidating. LME lead stocks increased for three consecutive days, leading to long positions exiting the market. LME lead then dropped to a session low of $2,186/mt, and after slight consolidation, it closed at $2,193/mt, down 0.09%. The most-traded SHFE lead contract (2408) opened at ¥19,500/mt, briefly touched a high of ¥19,560/mt at the beginning, then fell to a session low of ¥18,935/mt amid the weak LME lead atmosphere, and finally closed at ¥18,985/mt, down ¥275/mt, or 1.43%.

Zinc

Overnight, LME zinc opened at $2,855/mt, briefly fluctuated around the average daily line at the beginning, then rose above the average daily line, reaching a session high of $2,885.5/mt. During the night session, LME zinc surged and then quickly fell to a session low of $2,837.5/mt, before rebounding to near the average daily line by the end of the trading session, closing up $11.5/mt, or 0.4%, with a trading volume reduced to 5,935 lots and open interest down by 828 lots to 232,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the 10-day moving average providing support. LME zinc stocks decreased by 2,350 mt to 247,100 mt, down 0.94%. The impact of lower-than-expected US economic data continued, with market sentiment expecting at least one rate cut this year. The US dollar index fluctuated, and LME stocks continued to decline, leading to a continued rebound in LME zinc prices.

Overnight, the most-traded SHFE zinc contract (2408) opened at ¥23,885/mt, briefly touched a high of ¥23,920/mt at the beginning, then fluctuated downwards to a session low of ¥23,695/mt, before rebounding to near the average daily line and finally closing down at ¥23,760/mt, down ¥75/mt, or 0.31%, with a trading volume reduced to 65,293 lots and open interest increased by 65 lots to 94,053 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 20-day moving average providing support. There was no significant improvement in fundamentals, and SHFE zinc remained hovering at high levels. Downstream consumption may weaken MoM during the off-season, limiting the upward space for zinc prices.

Tin

In the night session yesterday, the most-traded SHFE 2408 tin contract closed at 270,240 yuan/mt, up 3,430 yuan/mt, an increase of 1.29%. The highest price was 272,100 yuan/mt, and the lowest was 268,500 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 2408 tin contract, versus premiums of 0-500 yuan/mt for delivery brands and premiums of 600-800 yuan/mt for Yunxi brand. Tin prices rebounded yesterday, and transactions in the downstream market were relatively thin. Yesterday, SHFE tin warrants decreased by 128 mt to 15,251 mt, while LME tin inventory increased by 90 mt to 4,765 mt.

Nickel

On June 19, Jinchuan was at a premium of 2,800-3,000 yuan/mt, with an average of 2,900 yuan/mt, up 50 yuan/mt 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 of 50 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. 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 132,100-132,600 yuan/mt, down 1,500 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 6,969 yuan/mt (nickel sulphate prices were 6,969 yuan/mt higher than nickel briquette prices).