Copper

LME copper opened at $10,605/mt overnight, initially reaching a high of $10,605/mt before trending downward. By the end of the trading session, it touched a low of $10,363/mt and finally closed at $10,396/mt, with a decline of 3.94%. Trading volume reached 36,000 lots, and open interest was at 344,000 lots. The most-traded SHFE copper contract opened at 84,500 yuan/mt, initially reaching a high of 85,080 yuan/mt before trending downward. During the session, it touched a low of 83,880 yuan/mt and closed at 84,260 yuan/mt. Trading volume reached 131,000 lots, and open interest was at 215,000 lots, with a decline of 2.79%.

On the macro front, the US Fed's May meeting Minutes showed that several officials are willing to tighten policy further if necessary. The long-run neutral interest rate may be higher than previously expected, which is bullish for the US dollar and puts pressure on copper prices. Additionally, copper cathode shipments from China to LME warehouses in Asia arrived, leading some bulls to close their positions and exit the market.

On the fundamentals, copper prices saw a correction yesterday, prompting some downstream buyers to restock at lower prices, although many remained on the sidelines, waiting for further declines. Sellers are still waiting for downstream procurement. According to SMM, inventory at some smelters has reached warehouse limits. If copper prices continue to fall, a slight market recovery is expected. In terms of prices, suppressed demand is exerting upward pressure on copper prices.

Aluminum

Overnight, the most-traded SHFE aluminum contract 2407 opened at 21,110 yuan/mt, reaching a high of 21,220 yuan/mt and a low of 20,945 yuan/mt, and closed at 21,040 yuan/mt, down 335 yuan/mt, a decrease of 1.57%. The previous trading day, LME aluminum opened at $2,710.5/mt, reached a high of $2,749/mt and a low of $2,621/mt, and closed at $2,640.5/mt, down $75/mt, a decrease of 2.76%.

Summary: On the macro front, the US Fed Minutes released last night were hawkish, and intensified overseas trade frictions are putting pressure on demand. On the fundamentals, social inventory grew YoY, and alumina prices recently surged and then retreated. Under the influence of multiple factors, aluminum prices fell sharply overnight, and are expected to continue to fluctuate widely in the short term.

Lead

Overnight, LME lead opened at $2,329/mt and continued its recent upward trend, reaching a high of $2,359/mt, the highest since April 26, 2022. However, after the release of the US Fed meeting minutes, the US dollar index jumped to a one-week high, causing base metals to fall. LME lead also dropped sharply to $2,308/mt and eventually closed at $2,312/mt, down 0.73%.

Overnight, SHFE lead warrant inventory increased by over 1,000 mt. The most-traded SHFE lead contract (2407) opened at 18,685 yuan/mt, but the tight supply of scrap eased, causing SHFE lead to move downwards after a higher opening, hitting a low of 18,455 yuan/mt. By the night session, SHFE lead's decline slightly retraced, eventually closing at 18,520 yuan/mt, down 0.19%. Its open interest reached 80,756 lots, an increase of 1,132 lots from the previous trading day.

Zinc

Overnight, LME zinc opened at $3,123/mt, reaching a high of $3,147/mt. During European trading hours, LME zinc began to decline to around $3,090/mt. In the night session, LME zinc further dropped to a low of $3,052.5/mt. By the end of the trading session, LME zinc was narrowly fluctuating and closed lower at $3,057/mt, down $66/mt or 2.11%. Trading volume reduced to 9,816 lots, and open interest decreased by 716 lots to 242,000 lots. LME zinc inventory decreased by 900 mt to 257,625 mt, a drop of 0.35%. The US Fed's meeting minutes reiterated hawkish comments, dampening rate cut expectations and reducing market bets on multiple rate cuts by the Fed. The US dollar index rebounded, exerting macro pressure on base metals, leading to a decline in LME zinc.

Overnight, the most-traded SHFE zinc contract opened at 24,595 yuan/mt. After the opening, SHFE zinc slowly declined to a low of 24,440 yuan/mt, then began to narrowly fluctuate around the average daily line, reaching a high of 24,665 yuan/mt. It closed lower at 24,535 yuan/mt, down 355 yuan/mt or 1.43%. Trading volume increased to 130,000 lots, and open interest decreased by 4,761 lots to 122,000 lots. Macro sentiment remained unchanged, but high zinc prices suppressed downstream consumption, and fundamentals showed no improvement, leading to a shift lower in SHFE zinc.

Tin

In the night session yesterday, the SHFE 2406 tin contract closed at 273,950 yuan/mt, down 4,920 yuan/mt or 1.76%, with a high of 277,380 yuan/mt and a low of 272,220 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 500-1,000 yuan/mt over SHFE 2406 tin contract, versus discounts of 500 yuan/mt to premiums of 300 yuan/mt for delivery brands, discounts of 300 yuan/mt to premiums of 600 yuan/mt for Yunxi brand, and discounts of 700 yuan/mt for imported brand tin ingots. Tin prices fell during the morning session yesterday, and downstream companies showed little willingness to purchase, with most choosing to wait and see. Overall, the spot market was relatively quiet yesterday.

Nickel

On May 22, Jinchuan nickel was at a premium of 600-800 yuan/mt, with an average of 700 yuan/mt, flat compared to the previous trading day. Russian nickel was at a discount of 300 to 600 yuan/mt, with an average of 450 yuan/mt, up 100 yuan/mt from the previous trading day. Although the market slightly dropped in the morning along with the non-ferrous metals sector, it remained at a high level overall. Downstream demand did not significantly increase, making spot market transactions scarce. Nickel briquette prices were 154,200-154,700 yuan/mt, up 750 yuan/mt from the previous trading day. The price gap between nickel briquette and nickel sulphate was about 8,086.4 yuan/mt (nickel sulphate prices were 8,086.4 yuan/mt lower than nickel briquette prices).