SMM Morning Comments (Jun 13): Base Metals Closed Mostly With Losses Before The Federal Reserve's Interest Rate Meeting

SHANGHAI, Jun 13 (SMM) – LME and SHFE base metals closed mostly with losses overnight

Copper: LME copper prices closed at $8,288/mt overnight, down 0.61%. Trading volume was 12,000 lots and open interest stood at 250,000 lots. The most active SHFE 2307 copper contract finished at 66,840 yuan/mt overnight, down 0.39%. Trading volume was 29,000 lots and open interest stood at 182,000 lots. On the macro front, there were few economic data yesterday, and the market remained cautious ahead of several key policy decisions to be made this week. The Fed is expected to keep interest rates unchanged for the first time since January 2022. The US dollar surged before falling. As of Monday June 12, SMM copper inventory across major Chinese markets stood at 98,400 mt, down 11,000 mt from last Friday and down 17,300 mt from the same period last year. The inflows of imported copper were limited. This, combined with concentrated maintenance at smelters, reduced domestic copper supply. Hence inventories dropped across China. In terms of consumption, due to the approaching delivery and the high premiums, downstream buying interest was weak. Copper prices are expected to remain rangebound before the announcement of the Fed’s rate decision.

Lead: Overnight, LME lead prices opened at $2,056/mt and closed at $2,066/mt after hitting the lowest point at $2,047/mt and the highest point at $2,080/mt, up $7/mt or 0.34%.

The most-traded SHFE 2307 lead contract opened at 15,310 yuan/mt and hovered around 15,300 yuan/mt and finally closed at 15,320 yuan/mt after hitting the highest point at 15,330 yuan/mt and the lowest point at 15,320 yuan/mt, up 85 yuan/mt or 0.56%.

Zinc: Overnight, LME zinc dipped. The Fed is expected not to announce an interest rate hike for the first time since March, but the rate may still stand high.

SHFE zinc closed with losses overnight on impact of bearish news.

A large number of imported zinc ingots may flood into the spot market, thereby making for supply overhang.

Tin: Yesterday night, SHFE 2307 tin contract prices fell to 208,280 yuan/mt, then gradually rebounded and closed at 209,620 yuan/mt, down 1.38%.

Nickel: On the supply side, spot nickel premiums dropped yesterday, and the trades remained slack. NPI 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, the stainless steel futures prices hovered at highs, and the spot prices also rose slightly yesterday. In the afternoon, a stainless steel mill in east China shipped a large number of hot-rolled coils to the market, dragging down the spot hot-rolled coil price. The market transactions remain sluggish during the off-season, and short-term stainless steel spot prices will fall. In general, nickel demand remained weak. SMM thus presumes that nickel prices will fall.

[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.]