SMM Morning Comments (Jun 26): Zinc, Aluminium And Lead Prices Closed With Losses

SHANGHAI, Jun 26 (SMM) –Zinc and lead closed with losses

Zinc: LME zinc price dipped last Friday amid the rising US dollar index. LME zinc inventories decreased by 50 mt to 78,775 mt.

SHFE zinc market was closed for the Dragon Boat Festival holiday.

On the macro front, Fed officials’ hawkish signals piled great pressure on LME zinc price. In SHFE zinc market, zinc concentrates and refined zinc imports flowed into the market, and subsequent supply pressures will need to be monitored.

Lead: LME lead opened at $2,159/mt at last Friday’s session, and dropped to $2,135/mt on a rally in the US index, and finally closed down 1.46% at $2,128/mt.

The most-traded SHFE 2307 lead contract was closed at last Friday’s session for the Chinese Dragon Boat Festival holiday, and resumed normal trading today.

On the macro front, at last Friday, June PMI showed stagnant business activity in the euro zone, while business activity in the US shrank more than expected, exacerbating jitters about the central bank’s monetary tightening policy. The 10-year U.S. Treasury yield fell more than 10 basis points intraday. Two-year British bond yields rose more than 10 basis points intraday, hitting a new high since 2008.

Aluminium: The most-traded SHFE 2307 aluminium contract opened at 18,550 yuan/mt at the night session of June 21 (last day before the Dragon Boat Festival), with its low and high at 18,370 yuan/mt and 18,590 yuan/mt before closing at 18,390 yuan/mt, down 155 yuan/mt or 0.84%. LME aluminium opened at $2,208.5/mt last Friday, with its low and high at $2,163.5/mt and $2,209/mt respectively before closing at $2,178/mt, a drop of $23.5/mt or 1.07%.

Expectation of US interest rate hikes will put great downward pressure on SHFE aluminium after the holiday. Restarts of idled aluminium capacity in Yunnan will grow supply pressure. Increased arrivals of aluminium ingots after the holiday will cause spot premiums to narrow. Demand outlook is not optimistic. To sum up, aluminium prices may drop, but low inventories will limit the downside room.

[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.]