US dollar declines, most base metals rise, SHFE aluminum gains over 1%, coking coal and coke, lithium carbonate lead losses [SMM Midday Review]

SMM June 12 News:

Metal Market:

As of the midday close, domestic market base metals generally rose, with SHFE copper down 0.45%, SHFE aluminum up 1.14%, SHFE zinc up 0.34%, SHFE lead up 0.62%, SHFE tin slightly down, and SHFE nickel down 0.84%.

In addition, the main continuous futures contract for foundry aluminum rose 0.62%, while alumina fell 0.45%. Lithium carbonate fell 1.3%, silicon metal fell 0.2%, and polysilicon fell 0.5%.

The ferrous metals series mostly fell, with iron ore slightly down, rebar down 0.8%, and HRC down 0.74%. Stainless steel rose 0.76%. In the coking coal and coke sector: coking coal fell 1.9%, and coke fell 1.33%.

In the overseas metal market, as of 11:45, LME metals all rose, with LME zinc up 0.45%, LME copper up 0.53%, LME aluminum up 0.32%, LME lead up 0.33%, LME tin up 0.2%, and LME nickel up 0.35%.

In the precious metals sector, as of 11:45, COMEX gold rose 1.52%, and COMEX silver rose 0.65%; domestically, SHFE gold rose 1.01%, and SHFE silver fell 0.66%.

As of the midday close, the most-traded contract for the European Containerized Freight Index fell 0.02%, closing at 2019.4.

As of 11:45 on June 12, some midday futures market movements:

》June 12 SMM Metal Spot Prices

Spot and Fundamentals

Copper: Today, spot #1 copper cathode in Guangdong was quoted at a premium of 20 yuan/mt to a discount of 100 yuan/mt against the front-month contract, with an average premium of 60 yuan/mt, down 30 yuan/mt from the previous trading day; SX-EW copper was quoted at a discount of 50 yuan/mt to a discount of 30 yuan/mt, with an average discount of 40 yuan/mt, down 10 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 79,010 yuan/mt, down 295 yuan/mt from the previous trading day, and the average price of SX-EW copper was 78,910 yuan/mt, down 275 yuan/mt from the previous trading day. Spot Market: Today, Guangdong's inventory continued to decline, marking the sixth consecutive day of decline, primarily due to tight supply... 》Click for details

Macro Front

Domestic:

[Li Chunlin, Deputy Director of the National Development and Reform Commission: Fully Supporting Shenzhen in Advancing Comprehensive Reform Pilot] Li Chunlin, Deputy Director of the National Development and Reform Commission, stated at a State Council Information Office press conference on June 12 that the Implementation Plan for the Comprehensive Reform Pilot in Shenzhen to Build a Pioneer Demonstration Area of Socialism with Chinese Characteristics (2020-2025) has been implemented for nearly five years. To further consolidate and expand the pilot results, and support Shenzhen in intensifying efforts to eliminate institutional and mechanism shortcomings in various aspects and accelerate the construction of a high-level socialist market economy system, the General Office of the CPC Central Committee and the General Office of the State Council recently issued the Opinions on Advancing Shenzhen's Comprehensive Reform Pilot to Deepen Reform and Innovation and Expand Opening Up. This is a significant measure to support Shenzhen in building a pioneer demonstration area of socialism with Chinese characteristics, an upgraded version of the Plan, and an important interpretation of China's unwavering commitment to deepening reform and opening up. Next, we will earnestly implement the decisions and arrangements of the CPC Central Committee and the State Council, and work with relevant departments and Guangdong Province to fully support Shenzhen in advancing its comprehensive reform pilot program, ensuring the implementation of the "Opinions".

[Ministry of Industry and Information Technology: Supports Automakers' "60-Day Payment Term" Commitment to Promote Healthy Industry Development] Recently, 17 key automotive enterprises, including FAW, Dongfeng, GAC, and Seres, have successively issued statements committing to "payment terms not exceeding 60 days". Today (the 12th), relevant officials from the Ministry of Industry and Information Technology stated that the automakers' commitment is of great significance in promoting the healthy and sustainable development of the automotive industry. Relevant officials from the Ministry of Industry and Information Technology also stated that the automotive enterprises' proactive commitment to "payment terms not exceeding 60 days" reflects their positive response to national calls, fulfillment of social responsibilities, and corporate commitments, and is of great significance in building a collaborative and win-win development ecosystem for "complete vehicles - parts". Relevant officials from the Ministry of Industry and Information Technology simultaneously stated that currently, China's NEV industry is at a critical juncture for high-quality development. It is hoped that enterprises will lead by example and strengthen industry self-discipline. It is also hoped that all sectors of society will care about and support the high-quality development of the NEV industry, jointly resist online chaos such as "internet trolls" and "black PR", and create a positive, civilized, and orderly development environment. (Cailian Press)

The People's Bank of China conducted 119.3 billion yuan of 7-day reverse repo operations today, with an operating interest rate of 1.40%, unchanged from the previous rate. As 126.5 billion yuan of 7-day reverse repos matured today, a net withdrawal of 7.2 billion yuan was realized.

►The central parity rate of the RMB against the US dollar in the inter-bank foreign exchange market on June 12 was 7.1803 RMB per US dollar.

US dollar:

As of 11:45, the US dollar index fell by 0.28%, reporting 98.35. US inflation data lower than expected has increased market expectations for a possible interest rate cut by the US Fed. US data has also prompted Trump to once again call for a significant interest rate cut by the US Fed. US data shows that the US Consumer Price Index (CPI) rose by 0.1% month-on-month in May, lower than the 0.2% increase expected by economists, as falling gasoline prices partially offset the impact of rising rents. However, against the backdrop of imposed import tariffs, inflation is expected to accelerate in the coming months. The market currently expects the US Fed to cut interest rates by 50 basis points before the end of the year. Market participants are awaiting the upcoming US Producer Price Index (PPI) data to gain more signals about the US Fed's policy path ahead of the Fed's meeting on June 17-18.

A research report by China International Capital Corporation Limited (CICC) pointed out that next week, the US Fed will hold its June interest rate-setting meeting. CICC believes that the FOMC in June may slightly raise its inflation forecast, but due to the resilience of non-farm payrolls and the cooling of tariff tensions, the US Fed's assessment of growth may be more optimistic than in March. As a result, Powell's stance at this meeting may lean hawkish, which could disappoint investors expecting an interest rate cut from the US Fed.

Data releases:

Today, the following data will be announced: US initial jobless claims for the week ending June 7, US continuing jobless claims for the week ending May 31, US PPI year-on-year rate for May, US core PPI year-on-year rate for May, Japan's BSI Large Manufacturing Confidence Index for Q2, UK GDP month-on-month rate for April, UK industrial production month-on-month rate for April, UK industrial production year-on-year rate for April, UK seasonally adjusted goods trade balance for April, and UK seasonally adjusted trade balance for April, among others.

In addition, at 12:00 on June 12, US President Trump increased the tariff on imported steel from 25% to 50%. He Lifeng visited the UK from June 8 to 13 and held the first meeting of the China-US Economic and Trade Consultation Mechanism.

Crude oil market:

As of 11:45, crude oil futures have dropped slightly but remain hovering near a more than two-month high. Specifically, WTI crude fell by 0.32%, and Brent crude fell by 0.42%. The market is concerned that escalating geopolitical tensions could disrupt oil supplies.

The US Energy Information Administration (EIA) reported that US crude oil inventories fell by 3.6 million barrels to 432.4 million barrels last week. Analysts had expected a decline of 2 million barrels. Increased refining activity pushed up gasoline and distillate inventories. The EIA stated that US gasoline inventories rose by 1.5 million barrels to 229.8 million barrels, compared to market expectations of a 900,000-barrel increase. Distillate inventories, including diesel and heating oil, rose by 1.2 million barrels to 108.9 million barrels, compared to market expectations of an 800,000-barrel increase. (Webstock Inc.)

Spot market overview:

►Both inventory and copper prices fell, but the price spread between futures contracts widened; trading weakened, and premiums declined. [SMM South China Spot Copper]

►Tianjin zinc: Futures market mainly fluctuated, with premiums holding steady. [SMM Midday Review]

►[SMM Nickel Midday Review] On June 12, nickel prices continued to decline, with US CPI inflation for May falling short of expectations across the board.

Midday reviews of other metal spot markets will be updated later. Please refresh to view.