SMM Morning Comment For SHFE Base Metals On June 7

SHANGHAI, June 7 (SMM) –

Copper

Overnight, LME copper opened at $10,023/mt, hit a session low of $9,998.5/mt at the beginning, then climbed all the way to a session high of $10,159/mt at the end of the trading session, and finally closed at $10,145.5/mt, with a gain of 1.39%. Trading volume reached 14,000 lots, and open interest reached 333,000 lots. Overnight, the most-traded SHFE copper contract opened at 81,510 yuan/mt, hit a session low of 81,300 yuan/mt at the beginning, then rebounded and hit a session high of 82,230 yuan/mt at the end of the trading session, and finally closed at 82,040 yuan/mt, with a gain of 1.38%. Trading volume reached 50,000 lots, and open interest reached 175,000 lots. On the macro front, the European Central Bank cut interest rates by 25 basis points for the first time since 2019 and raised inflation expectations, driving copper prices higher. However, after the ECB rate cut, the strong performance of the US dollar together with demand concerns limited the rise in copper prices. On the fundamentals, approaching the Dragon Boat Festival holiday, there was some pre-holiday stockpiling by downstream buyers, but overall procurement did not significantly rebound. Meanwhile, imported copper continued to arrive. As of Thursday, June 6, SMM copper stocks across national mainstream markets increased by 1,900 mt from Monday to 450,700 mt, up 7,200 mt from last Thursday, continuously refreshing the yearly high, but the growth rate began to slow down. Overall, the market may be boosted by rate cut expectations, and copper prices are expected to remain high. Today, the market will focus on the US non-farm payrolls report for May to be released in the evening.

Aluminum

Overnight, the most-traded SHFE 2407 aluminum contract opened at 21,265 yuan/mt, reaching a high of 21,380 yuan/mt and a low of 21,230 yuan/mt, and closed at 21,375 yuan/mt, up 150 yuan/mt, an increase of 0.71%. On the previous trading day, LME aluminum opened at $2,633.5/mt, reached a high of $2,673/mt and a low of $2,628.5/mt, and closed at $2,647.5/mt, up $12.5/mt, an increase of 0.47%.

On the macro front, the European Central Bank's recent decision to cut interest rates has sparked hopes that the US Fed might follow suit. Weaker-than-expected US employment data has fueled hopes for a rate cut by the Fed later this year, shifting market focus to the non-farm payrolls data to be released on Friday. On the fundamentals, domestic aluminium operating capacity has entered a stable transition period, with capacity awaiting resumption mainly concentrated in Yunnan, Sichuan, and Guizhou, leading to a slowdown in production growth. On the downstream demand, the market is relatively weak, with new orders in the industry remaining sluggish, although some sectors still show resilience in demand. In the short term, the fundamentals indicate a marginal weakening of the supply-demand relationship, and domestic aluminum prices are expected to move rangebound next week.

Lead

Overnight, LME lead opened at $2,245/mt, fluctuated downwards during the Asian session to a low of $2,228.5/mt; during the European session, LME lead rebounded to a high of $2,259/mt, but at the end of the trading session, longs reduced positions, giving back some gains, and finally closed at $2,239/mt, down 0.31%.

Overnight, the most-traded SHFE lead contract opened at 18,890 yuan/mt, briefly touched a high of 19,020 yuan/mt at the beginning, then fell back and fluctuated downwards, hitting a session low of 18,870 yuan/mt at the end of the trading session, and finally closed at 18,905 yuan/mt, up 0.45%, marking two consecutive days of gains.

Zinc

Overnight, LME zinc opened at $2,882.0/mt, hit a session low of $2,877.5/mt at the beginning, then longs pushed LME zinc higher, with the focus rising to around $2,905.0/mt. During the European trading session, LME zinc's focus fell to around $2,885.0/mt, then fluctuated upwards, with the focus returning to around $2,910.0/mt, hitting a session high of $2,924.0/mt, and finally closed up at $2,918.0/mt, up $37/mt, or 1.28%. Trading volume decreased to 10,000 lots, and open interest decreased by 3,892 lots to 238,000 lots. Overnight, LME zinc inventories increased by 3,125 mt to 260,775 mt, up 1.19%. Overnight, the European Central Bank cut interest rates for the first time in five years, reigniting macro optimism, and LME zinc rebounded to correct its decline. LME zinc is expected to fluctuate strongly today.

Overnight, the most-traded SHFE zinc contract opened at 24,090 yuan/mt, hit a session low of 24,045 yuan/mt at the beginning, then longs took control, pushing SHFE zinc higher, with the focus rising to around 24,255 yuan/mt, hitting a session high of 24,290 yuan/mt at the end of the trading session, and finally closed up at 24,265 yuan/mt, up 270 yuan/mt, or 1.13%. Trading volume decreased to 71,000 lots, and open interest decreased by 3,026 lots to 75,000 lots. Domestic inventory reduction provided support for zinc prices, coupled with the impact of overseas sentiment, SHFE zinc is expected to continue rallying during the day.

Tin

Yesterday's overnight trading saw the most-traded SHFE tin contract closed at 267,670 yuan/mt, up by 6,560 yuan/mt, an increase of 2.51%. The highest price was 267,860 yuan/mt, and the lowest was 262,680 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 300 yuan/mt to premiums of 300 yuan/mt over SHFE 2407 tin contract, versus discounts of 300 to premiums of 400 yuan/mt for delivery brands and premiums of 500-600 yuan/mt for Yunxi brand. Tin prices fluctuated upward yesterday. Downstream companies, mostly having stocked up enough raw materials earlier, barely showed any purchasing interest. Overall, the spot market was relatively active yesterday. SHFE tin warrants decreased by 506 mt to 15,954 mt, while LME tin inventory decreased by 185 mt to 4,815 mt.

Nickel

On June 6, Jinchuan nickel was at a premium of 1,600-1,800 yuan/mt, with an average of 1,700 yuan/mt, up 350 yuan/mt compared to the previous trading day. Russian nickel was at a discount of 100-400 yuan/mt, with an average of 250 yuan/mt, up 50 yuan/mt compared to the previous trading day. In the morning, the market continued to decline. The drop in raw material prices led to downstream demand, resulting in a slight recovery in the spot market transactions. The shortage of electro-deposited nickel in the spot market continued, and the premium and discount of various brands showed a significant increase. Nickel briquette prices were 139,100-139,700 yuan/mt, down 1,000 yuan/mt compared to the previous trading day. The price gap between nickel briquette and nickel sulphate was about 10,827 yuan/mt (nickel sulphate prices were 10,827 yuan/mt higher than nickel briquette prices).