SMM Morning Comment For SHFE Base Metals On June 17

SHANGHAI, June 17 (SMM) –

Copper

Last Friday night, LME copper opened at $9,722.5/mt, surged to a session high of $9,793/mt in early trading, then fluctuated downward to a session low of $9,705.5/mt, before rebounding and finally closing at $9,772.5/mt, with open interest at 334,000 lots. Last Friday night, the most traded SHFE 2407 copper contract opened at ¥79,410/mt, hit a session high of ¥79,530/mt in early trading, then fluctuated downward to a session low of ¥78,760/mt, rebounded at the end of the trading session, and finally closed at ¥79,290/mt, marking a decline of 0.49%, with trading volume at 41,000 lots and open interest at 174,000 lots.

On the macro front, US Fed officials maintained a hawkish strategy, indicating the need to see more evidence of declining inflation and suggesting a possible rate cut by the end of the year, which boosted the dollar and pressured copper prices. On the fundamentals side, the supply side saw a certain amount of imported copper arriving over the weekend. In terms of consumption, copper prices have been trending lower, and with the delivery date approaching, downstream buyers exhibited some caution, leading to a slight recovery in overall transactions. If copper prices remain stable, consumption may further improve. Overall, with the dollar remaining strong, copper prices are expected to face some upward pressure.

Aluminum

On last Friday night, the most-traded SHFE aluminum 2407 contract opened at 20,510 yuan/mt, reaching a high of 20,525 yuan/mt and a low of 20,375 yuan/mt, and closed at 20,455 yuan/mt, down 110 yuan/mt, a decrease of 0.53%. The previous trading day, LME aluminum opened at $2,539/mt, reached a high of $2,552.5/mt and a low of $2,502/mt, and closed at $2,523/mt, down $21.5/mt, a decrease of 0.84%.

Summary: On the macro level, the US Fed's wavering stance on interest rate cuts and escalating regional conflicts provided support for gold and commodity prices. On the fundamentals, the arrival of the off-season, together with increasing overseas market frictions, has led to insufficient orders for aluminum processing enterprises and a reduction in operating rates. The supply-demand relationship in the domestic aluminum market is gradually weakening. In the short term, aluminum prices are under pressure, and are expected to hover around the current level.

Lead

Last Friday, LME lead opened at $2,146/mt, operated weakly during the Asian session, and narrowly fluctuated downward to $2,146/mt under the upward pressure of the US dollar index during the European session. Before the end of the trading session, it slightly rebounded above the daily moving average and finally closed at $2,153/mt, up $0.5/mt, an increase of 0.02%.

Last Friday night, the most-traded SHFE lead contract opened at 18,540 yuan/mt, initially dragged down by the weak LME lead to a low of 18,514 yuan/mt, then rebounded to a high of 18,650 yuan/mt, and finally closed at 18,600 yuan/mt, up 55 yuan/mt, an increase of 0.33%.

Zinc

Last Friday, LME zinc opened at $2,873.5/mt, initially touched a high of $2,873.5/mt, then fell all the way to a low of $2,759/mt. By the end of the trading session, LME zinc rebounded and closed lower at $2,790/mt, down $80/mt, a decrease of 2.79%. Trading volume increased to 12,253 lots, and open interest increased by 13,807 lots to 231,000 lots. LME zinc recorded a bearish candlestick, with the 10-day moving average forming resistance above. LME zinc inventory decreased by 1,700 mt to 254,200 mt, a decrease of 0.66%. Macro sentiment remained poor, with fluctuating expectations of the US Fed, and the US dollar index continued to strengthen, suppressing the performance of non-ferrous metals, leading to a decline in LME zinc.

Last Friday, the most-traded SHFE zinc contract (2408) opened at 23,300 yuan/mt, initially fell to a low of 23,175 yuan/mt, then rebounded above the daily moving average as longs reduced positions, touched a high of 23,445 yuan/mt, and narrowly fluctuated by the end of the trading session, finally closing lower at 23,400 yuan/mt, down 140 yuan/mt, a decrease of 0.59%. Trading volume increased to 73,018 lots, and open interest increased by 619 lots to 79,575 lots. SHFE zinc recorded a bullish candlestick, with the lower Bollinger Bands providing support. The US dollar index remained high, putting macro pressure on zinc prices. With the fundamentals of upstream and downstream sectors entering the off-season, demand weakened, and SHFE zinc lacked upward momentum, overall operating weakly and fluctuating.

Tin

Last Friday night, the most-traded SHFE tin contract closed at 369,150 yuan/mt, down 2,240 yuan/mt, a decrease of 0.83%.

During last Friday's morning session, 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 100 to premiums of 100 yuan/mt over SHFE 2407 tin contract, versus discounts of 200 yuan/mt to premiums of 400 yuan/mt for delivery brands and premiums of 400-800 yuan/mt for Yunxi brand. Tin prices moved rangebound last Friday. Downstream companies barely showed any purchasing interest. Overall, last Friday's spot market was relatively quiet.

Nickel

Last week, SHFE nickel prices continued to decline, dropping by 4.03% WoW. Over the past two weeks, nickel prices have significantly fallen, declining from 150,000 yuan/mt to 140,000 yuan/mt and further down to the range of 130,000 yuan/mt, with the lowest at 136,130 yuan/mt last week. The decline was mainly affected by the weakening macro support for metal prices, leading to a general pullback in non-ferrous metal prices and a gradual withdrawal of long funds from the futures market. On the macro front, data released by the US Bureau of Labor Statistics on Wednesday, June 12, showed that the US May CPI grew by 3.3% YoY, slightly lower than the previous value and expectations (3.4%), and core CPI grew by 3.4% YoY, lower than expectations (3.5%) and the previous value (3.6%), marking the lowest level in three years. May PPI fell by 0.2% MoM synchronously with CPI, indicating that US inflation pressure is easing, with a growth of 2.2% YoY, flat from April. Core PPI was flat MoM, lower than the expected 0.3% growth. Commodity prices dropped significantly by 0.8%, the largest decline since October 2023, with energy prices falling by 4.8% and food prices dropping by 0.1%. Although market expectations for a US Fed rate cut have risen, some opinions suggest that the Fed may slow down the rate cut process to avoid adverse effects on inflation control. Fundamentally, spot prices of various brands continued to rise, with premiums for domestic electro-deposited nickel from Huayou and CNGR increasing. However, in transactions, the midpoint of premiums and discounts for electro-deposited nickel remained at zero as trades were scarce with excessively high quotes. Supply side, although nickel production in May and June is expected to be normal or slightly increase, domestic nickel producers preferred exports for higher profits with the significant price gap between domestic and international markets, resulting in tight domestic supply of nickel plates. Some companies almost did not trade domestically, with most of their production exported, exacerbating the scarcity of domestic spot supply. Demand side, alloy consumption in June is expected to grow steadily, continuing to support refined nickel demand. However, the scheduled production of steel mills for June slightly decreased, reducing nickel demand. Though less affected by raw material prices, the electroplating industry, entering the traditional summer off-season, saw an overall decline in demand. Additionally, nickel briquettes were in short supply in the domestic spot market due to the continued closure of import window. With the expectations for a decline in nickel sulphate prices, the downstream raw material structure will change. Therefore, nickel prices are expected to range between 135,000-145,000 yuan/mt this week.