SMM Morning Comments (Jun 15): LME metals closed mixed awaiting Fed meeting this week

SHANGHAI, Jun 15 (SMM) – LME base metals closed mixed yesterday and on last Friday night as the market was waiting for the Fed meeting on interest rate. SHFE metals trading was suspended yesterday during the Dragon Boat Festival holiday.

In LME market, copper lost 0.38%, aluminium rose 1.08%, lead dipped 0.05%, zinc increased 1.67% last Friday, and tin gained 0.32%.

Copper: Three-month LME copper lost 0.38% to end at $9,957/mt in the daily trading yesterday, and is expected to trade between $9,900-9,980/mt today.

The most active SHFE 2107 copper contract is expected to trade between 70,800-71,500 yuan/mt today.

At the macro level, US May CPI reported unexpected increase for the second consecutive month, but the market reaction was flat, and copper futures remained fluctuating at high levels. The prices are expected to be affected by the Fed interest rate meeting, the employment prospect, and the inflation expectations. Today is the settlement day of June contract, and the spot discounts will shrink amid lower stocks to 110-190 yuan/mt.

Aluminium: Three-month LME aluminium rose 1.08% to settle at $2,488.5/mt in the overnight trading yesterday, with open interest losing 4,958 lots to 710,000 lots, and is expected to trade between $2,440-2,500/mt today.

The most liquid SHFE 2107 aluminium contract is expected to trade between 18,500-19,000 yuan/mt today, and the spot premiums of aluminium ingots are likely to be offered between 0-20 yuan/mt in east China.

Lead: Three-month LME lead dipped 0.05% to close at $2,205/mt in yesterday’s daily trading, remaining volatile at high levels after bulls increased positions on Friday night. US dollar index inched up slightly and stabilised in the overnight trading last Friday. Whether US dollar will keep rising and weigh on LME metals is worth attention today, and LME lead is likely to trade with the support at the 5-day moving average.

The most traded 2107 SHFE lead contract edged up 0.23% to settle at 15,465 yuan/mt last Friday night, after breaking through 15,500 yuan/mt amid decreased bulls’ positions. Today’s focus will be the social inventories and the support line of moving averages on the settlement day.

Zinc: Three-month LME zinc increased 1.67% to close at $3,051/mt in last Friday’s daily trading, with open interest increasing 5,532 lots to 269,000 lots. LME zinc stocks decreased 900 mt to 267,750 mt or 0.34% last Friday. US monetary policy remained loose amid the expectations of the infrastructure budget and the Fed reverse repo volume at record high. LME zinc is expected to trade between $3,030-3,080/mt today.

The trading of most active SHFE 2107 zinc contract was closed due to the Dragon Boat Festival yesterday. SHFE zinc is expected to fluctuate lower amid the underselling news and the off-peak season in the downstream industries. July contract is expected to trade between 22,300-22,800 yuan/mt today, and the premiums of 0# Shuangyan is likely to be seen between 90-100 yuan/mt over July contract.

Tin: Three-month LME tin gained 0.32% to end at $31,725/mt in the overnight trading yesterday, hitting a record high in ten years, with open interest down 5 lots to 12,216 lots. The world’s third-largest refined tin producer in Malaysia announced the impeded delivery due to the pandemic, which is expected to intensify the shortage of market supply, and more speculative buying further drove up LME tin. US May CPI increased 0.6% on the month, indicating the expanding inflation. Fed meeting is likely to affect tin prices this week. LME tin is expected to remain upward and trade between $31,000-32,000/mt today.

The most traded SHFE 2107 tin contract is expected to keep rising in the short term driven by LME tin, and is likely to trade between 207,000-215,000 yuan/mt today.

Nickel: SHFE nickel trading was closed in the holiday yesterday.