SMM Morning Comment For SHFE Base Metals (Jun 4)

SHANGHAI, Jun 4 (SMM) –
Copper
Overnight, LME copper opened at $9,566.5/mt, dipping to a low of $9,557.5/mt shortly after the opening bell. It then fluctuated upward, reaching a high of $9,648/mt during the session, before ending the day with a narrow rangebound fluctuation, closing at $9,638.5/mt, up 0.24%. Trading volume reached 16,000 lots, and open interest stood at 287,000 lots. Overnight, the most-traded SHFE copper 2507 contract opened at and dipped to a low of 77,910 yuan/mt, before surging straight up to a high of 78,400 yuan/mt shortly after the opening bell. It then maintained a narrow rangebound fluctuation, closing at 78,180 yuan/mt, up 0.5%. Trading volume reached 52,000 lots, and open interest stood at 187,000 lots. On the macro front, US data released on Tuesday showed that job openings increased in April, but layoffs also rose. Amid growing tariff concerns, the labour market is cooling. Starting Wednesday, the US will double tariffs on imported steel and aluminum to 50%, with Trump hoping countries will submit their best offers in trade negotiations. Overall, the US dollar remains under pressure, which is bullish for copper prices. On the fundamental side, from the supply side, although the supply in the Shanghai region decreased slightly today, there is still more inventory to be added subsequently, and imported supply is expected to arrive tomorrow. There were significant differences in copper cathode prices among various brands during the day, with premiums for different brands fluctuating widely. From the demand side, downstream consumption was sluggish on the first day after the holiday, with purchasing sentiment declining. As prices fell, downstream buyers became more hesitant. As of Monday, June 3, SMM's copper inventories in major regions across China increased by 14,300 mt MoM from before the holiday to 153,000 mt, up 32,900 mt from the previous low. Compared to the inventory changes from last Thursday, inventories in most regions across the country increased, with only a slight decrease in the Shanghai region. On the price front, it is expected that there will be limited upside potential for copper prices today.
Aluminum
Futures market: Last night, the most-traded SHFE aluminum 2507 contract opened at 19,990 yuan/mt, hitting a high of 20,005 yuan/mt and a low of 19,890 yuan/mt, before closing at 19,990 yuan/mt. Trading volume stood at 63,000 lots, with open interest at 191,000 lots. LME aluminum opened at $2,470.5/mt, reached a high of $2,479/mt and a low of $2,469.5/mt, then settled at $2,474.5/mt.
Although the increase in US steel and aluminum tariffs to 50% is negative for the market, China's direct aluminum semis exports to the US have already been restricted by high tariffs for many years, with limited actual incremental impact. The main effect is on overall market sentiment, suppressing global aluminum trade liquidity, particularly impacting countries highly dependent on US exports, and exacerbating regional supply surplus pressures in the short term. Fundamentally, domestic aluminum operating capacity remained stable. Notably, some aluminum smelters in north China increased the proportion of liquid aluminum alloying, reducing casting ingot volumes, which affected arrivals in major consumption areas. Demand side, downstream sectors showed signs of off-season expectations, with PV aluminum demand declining and automotive material demand expected to weaken in mid-to-late June. Construction aluminum demand remained lackluster, but aluminum wire and cable operating rates stayed high due to orders from State Grid. Inventory side, approaching the holiday, some aluminum processing enterprises conducted mild stockpiling based on orders on hand. Overall, short-term market sentiment may be impacted by tariff pressures, suppressing aluminum prices. Meanwhile, domestic aluminum ingot inventory drew down more than expected, supporting aluminum prices and spot premiums. Some industries already exhibited signs of off-season weakness, but the overall decline was better than expected, with demand resilience remaining. SHFE aluminum is expected to maintain a fluctuating trend in the short term, with solid support at lower levels. If macro pressures do not escalate significantly, prices may show mild upward potential.
Lead
Overnight, LME lead opened at $1,978.5/mt. During the Asian session, it fluctuated downward. Entering the European session, it rose to a high of $1,986.5/mt before closing at $1,986/mt, up $5/mt or 0.25%.

Overnight, the most-traded SHFE lead 2507 contract opened at 16,575 yuan/mt. After a slight rise to a high of 16,650 yuan/mt, it came under pressure and eventually closed at 16,635 yuan/mt, up 60 yuan/mt or 0.36%.

On the inventory side, according to SMM, as of June 3, the total social inventory of lead ingots in five regions tracked by SMM reached 49,900 mt, an increase of 6,500 mt from May 26 and over 400 mt from May 29. As of June 3, LME lead inventory decreased by 1,000 mt to 283,150 mt, with the decline coming from Singapore warehouses.

Today's lead price forecast:

After the Dragon Boat Festival holiday, lead prices continue to fluctuate in the doldrums, testing the bottom support. Suppliers are mostly actively selling, while some downstream enterprises are making just-in-time procurement after resuming production. Trading conditions have slightly improved in regions such as Hunan and Guangdong. Downstream operations have not yet fully resumed, and there is still a lot of wait-and-see sentiment in the post-holiday lead market. Some delivery brand supplies continue to be transferred to social warehouses. In addition, during the recent decline in lead prices, scrap battery prices have fallen slowly, resulting in losses exceeding 1,000 yuan per mt for secondary lead. Smelters have low enthusiasm for production or are refusing to budge on prices, with some secondary refined lead quotes even lower than primary lead. The cost support from secondary refined lead has once again become prominent for lead prices. Follow-up attention should still be paid to the recovery of secondary refined lead.
Zinc
Overnight, LME zinc opened at $2,692/mt. After opening, LME zinc prices declined all the way, hitting a low of $2,658/mt before rebounding and rising. They reached a high of $2,711.5/mt at the close of the session, ultimately closing up at $2,711.5/mt, up $18.5/mt or 0.69%. Trading volume decreased to 11,422 lots, while open interest fell by 64 lots to 213,000 lots. Overnight, LME zinc recorded a long lower shadow bullish candlestick, with the 40-day moving average providing support below. Renewed tariff uncertainties and a strengthening US dollar index from lows weighed on zinc prices. However, with continuous destocking at the LME, LME zinc prices rebounded during the session amid low inventory support.
Overnight, the most-traded SHFE zinc 2507 contract opened at 22,260 yuan/mt. In early trading, SHFE zinc hit a low of 22,260 yuan/mt, then fluctuated upward to reach a high of 22,435 yuan/mt. Subsequently, SHFE zinc pulled back from highs to near the daily average line, maintaining a narrow fluctuating trend. It ultimately closed up at 22,355 yuan/mt, up 175 yuan/mt or 0.79%. Trading volume decreased to 88,953 lots, while open interest fell by 1,589 lots to 121,000 lots. Overnight, SHFE zinc recorded a long upper shadow bullish candlestick, with the 60-day moving average providing support below. Driven by the LME market, zinc prices rose somewhat during the night session. However, with refined zinc production in June expected to increase significantly MoM, zinc price gains were limited under supply-side pressure, basically maintaining a fluctuating trend.

Nickel
Spot Market: On June 3, the SMM 1# refined nickel price was 121,400-124,300 yuan/mt, with an average price of 122,850 yuan/mt, up 525 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel was 2,500-2,600 yuan/mt, with an average premium of 2,550 yuan/mt, down 50 yuan/mt from the previous trading day. The premiums quotation range for Russian refined nickel was 100-500 yuan/mt, with an average premium of 300 yuan/mt, up 50 yuan/mt from the previous trading day.

Futures Market: The most-traded SHFE nickel contract (NI2507) opened higher on the morning of June 3, regaining the 122,000 yuan/mt level during the session, mainly exhibiting a fluctuating trend. As of 11:30, the closing price was 121,380 yuan/mt, up 0.25%.
In the medium and long term, the global nickel overcapacity remains unresolved, with the nickel market under triple pressures of "high supply, weak demand, and tight capital". In the short term, the bottom of the fluctuation range is seen at 118,000 yuan/mt, while the top is capped at 123,000 yuan/mt.