SHANGHAI, Jun 9 (SMM) – LME and SHFE base metals closed mostly with gains overnight.
Copper: LME copper prices closed at $8,372/mt overnight, a rise of 0.95%. Trading volumes were 17,000 lots and open interest stood at 252,000 lots. The most active SHFE 2307 copper contract finished at 67,000 yuan/mt overnight, up 0.34%. Trading volume was 37,000 lots and open interest stood at 185,000 lots. On the macro front, the data showed that the number of jobless claims in the US topped expectations last week. The US labour market cooled and the US dollar index fell. However, the market generally believes that the Fed's rate hike path is still unclear before the key inflation data is released. Spot quotes in east China remained high, and downstream buying interest was weak. The price spread between the SHFE front-month and SHFE next-month copper contracts is unlikely to expand. The spot market transactions were sluggish yesterday. The inventory in south China increased, mainly due to the increase in arrivals and the decrease in outbound shipments. Sellers adjusted prices but downstream buying interest was weak. The overall transaction was relatively quiet. On the whole, there were many smelters undertaking maintenance in June, and the supply of goods in the market was tight. But the downstream demand was also weak. Copper prices are expected to remain strong in the short term amid growing expectations of a pause in Fed rate hike in June.
Aluminium: The most-traded SHFE 2307 aluminium contract opened at 18,220 yuan/mt overnight and rose to 18,365 yuan/mt before closing at 18,340 yuan/mt, up 160 yuan/mt or 0.88%. LME aluminium opened at $2,211.5/mt on Thursday, with its low at $2,211/mt before closing at $2,263.5/mt, up $50.5/mt or 2.28%.
On the macro front, the number of Americans filing for unemployment benefits last week rose more than expected, but the market generally believes that the dollar will consolidate ahead of key inflation data and the Federal Reserve's interest rate decision next week. On fundamentals, hydropower generation in Yunnan has gradually improved recently. SMM predicts that a small amount of aluminium capacity may be resumed in the province in late June. In addition, 200,000 mt of aluminium capacity will be resumed in Guizhou and Sichuan. On the demand side, downstream consumption has gradually entered the off-season. However, due to the high proportion of molten aluminium output at smelters, aluminium ingot social inventories continue to drop. Short-term aluminium prices are expected to remain rangebound ahead of the Fed's interest rate decision.
Lead: On Thursday, LME lead opened at $2,838.5/mt, and closed up 0.22% at $2,048/mt for the fifth five straight day on falling US dollar amid higher-than-expected US initial jobless claims.
Overnight, SHFE 2307 lead contract opened at 15,140 yuan/mt, and trended lower to 15,155 yuan/mt in early trading session with supply decrease against a small increase in SHFE warrant inventory, and finally closed down 0.13% at 15,150 yuan/mt. Open interest dropped by 1,601 lots to 50,708 lots.
On the macro front, the number of people applying for unemployment benefits for the first time in the week of June 3 in the US was 261,000, a new high in October 2021.
In terms of fundamentals, the recent domestic and overseas lead ingot stocks hiked, and lead ingot exports are expected to decline due to rising SHFE/LME lead price ratio. In addition, there was a decrease in supply and demand. Therefore, lead market will move sideways in a short run.
Zinc: LME zinc trended higher yesterday amid supports from the 20-day moving average. LME zinc inventories dropped by 100 mt, or 0.12%, to 86,525 mt. LME zinc market stayed range-bound after impact of the U.S. debt issue has faded. The number of people applying for unemployment benefits for the first time in the week of June 3 in the US was 261,000, a new high in October 2021, the US dollar index fell.
SHFE zinc closed with gains overnight.
Recently, zinc market gained supports from improved the real estate sentiment, but still weighed down by shrinking downstream replenishment demand and the inflow of imported zinc.
Nickel: On the supply side, nickel prices moved rangebound. Spot premiums stabilised, and the transactions were slack. In terms of NPI, the plants held their quotes firm amid the improvement in macro sentiment and the firm nickel and stainless steel futures prices. On the demand side, according to SMM research, stainless steel futures prices hovered at highs due to the favourable macro front. The spot trades were slack, which restricted the price moves. SMM expects that the spot stainless steel prices will be stable in the short term, and nickel prices will move rangebound amid the mixed bearish and bullish sentiment.
[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.]