SMM Morning Comments (Jun 14): Base Metals Closed Mostly With Gains Before The Federal Reserve's Interest Rate Meeting

SHANGHAI, Jun 14 (SMM) – LME and SHFE base metals closed with gains overnight

Copper: LME copper prices closed at $8,441/mt last evening, up 1.85%. Trading volume was 24,000 lots and open interest stood at 252,000 lots. The most active SHFE 2307 copper contract finished at 67,900 yuan/mt overnight, up 1.33%. Trading volume was 46,000 lots and open interest stood at 189,000 lots. On the macro front, after the data released last night showed that the increase in consumer prices in the US in May was lower than market expectations and slowed down, the market strengthened its bet that the Fed will keep interest rates unchanged, and the US index fell sharply. Sellers refrained from selling at lows ahead of the delivery. The overall transaction in east China was limited. Some imported copper has flowed into the Guangdong market, and the inventory has increased slightly. With the rise of copper prices and weak end-user consumption, downstream buying interest was weak. High spot premiums also inhibited the downstream desire to purchase. Copper futures prices rebounded due to greater expectations of the Fed slowing down interest rate hikes.

Lead: Overnight, LME lead opened at $2,069/mt, and trended higher to $2,085.5/mt given that long positions increased again, and finally closed up $16/mt, or 0.77%, to $2,082/mt.

SHFE 2307 lead contract opened at 15,345 yuan/mt, and dipped to 15,290 yuan/mt, and finally closed up $10/mt, or 0.07%, to 15,315 yuan/mt.

On the macro front, after the release of the US CPI data in May, the US dollar index fell back in the short term, and LME non-ferrous metals hiked.

Zinc: Overnight, LME zinc made gains. Players took a wait-and-see stance with upcoming FOMC meeting.

SHFE zinc closed with losses overnight as rigid demand and more imported zinc led to piling-up of domestic spot zinc.

Nickel: The People's Bank of China announced on June 13 that the reverse repurchase rate was lowered, aiming to boost the domestic economy. Affected by this, commodities began to rebound at yesterday noon. On the supply side, the new pure nickel production lines were put into operation as scheduled. And output is ramping up during the year. On the demand side, stainless steel mills are more cautious about the production of 300-series during the off-season, but the output is expected to rise slightly spurred by the profits. However, the consumption of pure nickel is low. In terms of the alloy sector, it is still in the off-season. Orders placed by the military alloy companies are stable, but those placed by the civil alloy producers grew only slightly. SMM expects the pure nickel consumption by the alloy sector to be stable in June. The pure nickel market will still see a supply surplus in June, but the lower-than-expected CPI data released last night may boost the futures prices in the short term.

[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.]