SMM Morning Comment For SHFE Base Metals On June 19

SHANGHAI, June 19 (SMM) –

Copper

LME copper opened at $9,597/mt overnight, initially hitting a session low of $9,551/mt. It then rose throughout the session, reaching a high of $9,730.5/mt at the end of the trading session, and finally closed at $9,719/mt, with a gain of 0.26%. Trading volume reached 20,000 lots, and open interest reached 327,000 lots. The most traded SHFE 2407 copper contract opened at 77,800 yuan/mt overnight, initially hitting a session low of 77,760 yuan/mt. It then fluctuated higher throughout the session, reaching a high of 78,680 yuan/mt at the end of the trading session, and finally closed at 78,640 yuan/mt, with a gain of 0.11%. Trading volume reached 34,000 lots, and open interest reached 155,000 lots. On the macro front, U.S. retail sales data for May recorded 0.1%, lower-than-expected, with the previous value revised down to -0.2%. Expectations for a rate cut increased, and both natural gas and oil prices rose. Copper prices rose slightly, but gains were limited due to high inventory levels. Additionally, according to external sources on June 18, the head of Anglo American's Chile operations stated on Tuesday that copper production at the Los Bronces mine is expected to decrease by nearly one-third from historical average levels next year. On the fundamentals side, it is reported that some imported copper will arrive soon, and spot supply is expected to increase after the release of warrants. On the consumption side, although copper prices have fallen significantly, consumption is somewhat suppressed due to the small discount. If copper prices stabilize and the release of warrants continues to create an oversupply situation, premiums are expected to be under pressure, and just-in-time replenishment will increase. Overall, Anglo American's reduction in its flagship copper mine's production may provide some support for copper prices amid concerns.

Aluminum

Overnight, the most-traded SHFE aluminum 2408 contract opened at 20,330 yuan/mt, reached a high of 20,485 yuan/mt, a low of 20,320 yuan/mt, and closed at 20,455 yuan/mt, up 70 yuan/mt, an increase of 0.34%. On the previous trading day, LME aluminum opened at $2,508/mt, reached a high of $2,520/mt, a low of $2,470/mt, and closed at $2,495.5/mt, down $12/mt, a decrease of 0.48%.

Summary: On the macro level, the US Fed's stance on rate cuts has been wavering, and expectations for rate cuts within the year have weakened. Escalating regional conflicts provided support for the prices of safe-haven assets like gold and major commodities like crude oil. On the fundamentals, the arrival of the consumption off-season together with increasing overseas market frictions has led to insufficient orders for aluminum processing enterprises and a reduction in operating rates, heightening market concerns about downstream aluminum demand. After the withdrawal of long funds, aluminum prices have adjusted to a short-term low.

Lead

LME lead opened at $2,190/mt overnight, consolidating slightly around the daily moving average during the Asian session. Entering the European session, it fell to a low of $2,190/mt before briefly stabilizing. It then rebounded and rose amid a lower US dollar index and a generally rising non-ferrous metals market, reaching a high of $2,198/mt, up $2.5/mt, or 0.11%.

Overnight, the most traded SHFE 2408 lead contract opened at 18,890 yuan/mt. It initially rose to a high of 19,265 yuan/mt, boosted by the strength of LME lead. After a slight pullback, it consolidated around 19,150 yuan/mt and finally closed at 19,215 yuan/mt, up 325 yuan/mt, or 1.72%.

Zinc

Overnight, LME zinc opened at $2,824/mt. Initially, LME zinc fluctuated around the daily moving average. During the European trading session, it quickly fell to a low of $2,779/mt, then rebounded and rose all the way to a high of $2,856/mt, finally closing up at $2,854/mt, up $35/mt, or 1.24%. Trading volume reduced to 9,097 lots, and open interest decreased by 1,604 lots to 233,000 lots. Overnight, LME zinc recorded a bullish candlestick, with support from the lower Bollinger Bands. LME zinc inventory decreased by 1,500 tons to 249,450 tons, a decrease of 0.60%. U.S. retail sales for May recorded a monthly rate of 0.1%, lower-than-expected, and U.S. economic activity data was also lower-than-expected. The US dollar index plummeted, and LME zinc first fell and then rose, with market sentiment somewhat recovering.

Overnight, the most traded SHFE 2408 zinc contract opened at 23,250 yuan/mt. Initially, SHFE zinc fell to a low of 23,230 yuan/mt, then rose all the way to a high of 23,615 yuan/mt, finally closing up at 23,615 yuan/mt, up 205 yuan/mt, or 0.88%. Trading volume reduced to 74,067 lots, and open interest increased by 3,944 lots to 91,753 lots. Overnight, SHFE zinc recorded a bullish candlestick, breaking through multiple daily moving averages. On the fundamentals side, tight supply of ore continued to support zinc prices, together with the pull from overseas futures, SHFE zinc rose all the way.

Tin

The closing price of the most-traded SHFE tin contract in the night session yesterday was 268,250 yuan/mt, up by 920 yuan/mt, with an increase of 0.34%. The highest price was 268,610 yuan/mt, and the lowest was 263,960 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 0-200 yuan/mt over SHFE 2407 tin contract, versus discounts of 200 yuan/mt to premiums of 500 yuan/mt for delivery brands, premiums of 700-800 yuan/mt for Yunxi brand, and discounts of 500 yuan/mt imported brand tin ingots. Tin prices continued to rise yesterday. Downstream companies were on the sidelines. Overall, the spot market transactions were relatively poor yesterday.

Nickel

On June 18, Jinchuan nickel was at a premium of 2,700-3,000 yuan/mt, with an average of 2,850 yuan/mt, up 100 yuan/mt compared to the previous trading day. Russian nickel was at a discount 0-200 yuan/mt, with an average of 100 yuan/mt, flat compared to the previous trading day. In the morning, the market fluctuated downward, leading to a slight improvement in spot market transactions. On the other hand, the shortage of electro-deposited nickel in the spot market continued, and the premiums and discounts of various brands showed a significant upward shift. Nickel briquette prices were 133,750-133,950 yuan/mt, down 1,250 yuan/mt compared to the previous trading day. The price spread between nickel briquette and nickel sulphate was about 7,059 yuan/mt (nickel sulphate prices were 7,059 yuan/mt higher than nickel briquette prices).