SMM Morning Comment For SHFE Base Metals On June 13

SHANGHAI, June 13 (SMM) –

Copper

Overnight, LME copper opened at $9,819.5/mt, initially dropping to $9,805.5/mt, then fluctuated upwards, reaching a high of $10,014/mt, before retreating and narrowly fluctuating at the end of the trading session, finally closing at $9,946/mt, with a gain of 1.44%. Trading volume stood at 19,000 lots, and open interest stood at 330,000 lots. Overnight, the most-traded SHFE copper contract (2407) opened at 80,650 yuan/mt, initially reaching a high of 81,050 yuan/mt, then fluctuated downwards to a low of 80,110 yuan/mt, and narrowly fluctuated at the end of the trading session, finally closing at 80,380 yuan/mt, with a gain of 0.87%. Trading volume stood at 47,000 lots, and open interest stood at 173,000 lots. On the macro front, the non-seasonally adjusted US CPI for May recorded 3.3%, lower than the market expectation of 3.4%, dropping to a three-month low. The US dollar index opened lower, benefiting copper prices. In terms of fundamentals, copper prices dropped slightly yesterday, but downstream purchasing volumes did not increase significantly. This was mainly due to processing enterprises being bearish on the market outlook. After stockpiling for immediate needs, most enterprises remained in a wait-and-see sentiment. If copper prices continue to fall, purchasing volumes may increase. The prices, affected by the US Fed's hawkish signals, may be under downward pressure.

Aluminum

The most-traded SHFE 2407 aluminum contract opened at 20,970 yuan/mt overnight, reaching a high of 20,975 yuan/mt and a low of 20,795 yuan/mt, and closed at 20,855 yuan/mt, up 55 yuan/mt, or 0.26%. The previous trading day, LME aluminum opened at $2,541.5/mt, reached a high of $2,581.5/mt, a low of $2,520/mt, and closed at $2,569/mt, up $25/mt, or 0.98%.

Summary: On the macro level, US Fed interest rate cut expectations increased again, but the timing remains uncertain. On the fundamentals, the arrival of the off-season for consumption together with increasing overseas market frictions led to a decline in orders for aluminum processing enterprises, and the domestic aluminum market supply and demand relationship is gradually weakening. In the short term, aluminum prices are under pressure, and are expected to hover around a high level.

Lead

Futures Market:

Overnight, LME lead opened at $2,170/mt. Lead ingot inventories in the overseas market continued to increase, causing LME lead to shift lower. Later, as the US dollar fell from highs, LME lead bottomed out and climbed but failed to return to $2,200/mt, eventually closing at $2,175/mt, up 0.25%.

Overnight, domestic lead raw material costs rose, and delivery inventory accumulation appeared. The most-traded SHFE lead 2408 contract opened at RMB 18,690/mt, showing strong resilience. It finally closed at RMB 18,705/mt, up 0.43%; open interest stood at 82,517 lots, an increase of 1,544 lots from the previous trading day.

Zinc

Overnight, LME zinc opened at $2,787/mt, initially briefly dipping to $2,782/mt, then investors reduced short positions, and LME zinc fluctuated upwards. Into the night session, the release of CPI data below expectations led to a rapid increase in LME zinc, reaching a high of $2,899/mt, and finally closing up at $2,880/mt, up $93/mt, a gain of 3.36%. Trading volume reduced to 12,110 lots, and open interest reduced by 6,934 lots to 228,000 lots. LME zinc inventory fell by 1,450 mt to 257,900 mt, a decrease of 0.56%. The US released core CPI, with inflation data below expectations, boosting interest rate cut expectations. Non-ferrous metals rebounded, and LME zinc is expected to move narrowly fluctuating.

Overnight, the most-traded SHFE zinc contract (2408) opened at 23,780 yuan/mt, and rose to a high of 23,960 yuan/mt, then shifted lower to around 23,810 yuan/mt. At the end of the trading session, financial pressure continued to enter the market, and SHFE zinc moved upward to around 23,885 yuan/mt, narrowly fluctuating, finally closing up at 23,870 yuan/mt, up 335 yuan/mt, a gain of 1.42%. Trading volume increased to 54,470 lots, and open interest increased by 899 lots to 76,978 lots. SHFE zinc is expected to move narrowly fluctuating.

Tin

Overnight, the most-traded SHFE tin contract closed at 276,500 yuan/mt, an increase of 7,560 yuan/mt or 2.81%. The highest price was 278,420 yuan/mt, and the lowest was 275,100 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 discounts of 200 yuan/mt to premiums of 500 yuan/mt for delivery brands and premiums of 300-800 yuan/mt for Yunxi brand. Tin prices rose yesterday, and transactions in the downstream market were relatively thin. Yesterday, SHFE tin warrants decreased by 78 mt to 15,462 mt, while LME tin inventory decreased by 155 mt to 4,665 mt.

Nickel

On June 12, Jinchuan nickel was at a premium of 2,700-2,800 yuan/mt, with an average of 2,750 yuan/mt, up 150 yuan/mt from the previous trading day. Russian nickel was at a discount of 0-300 yuan/mt, with an average of 150 yuan/mt, flat compared to the previous trading day. In the morning, the market fluctuated at recent lows, leading to a slight recovery in spot market trades. The electro-deposited nickel supply tightness continued, and spot premiums and discounts of various brands moved upward significantly. Nickel briquette prices were 136,180-137,200 yuan/mt, up 500 yuan/mt from the previous trading day. The price spread between nickel briquette and nickel sulphate was about 10,045 yuan/mt (nickel sulphate prices were higher than nickel briquette prices by 10,045 yuan/mt).