SMM Morning Comment For SHFE Base Metals (Jun 19)

SHANGHAI, Jun 19 (SMM) –
Copper
Overnight, LME copper opened at $9,668/mt, hitting a high of $9,694.5/mt at the beginning of the session before fluctuating downward throughout the session, touching a low of $9,648/mt near the close, and eventually closing at $9,650.5/mt, down 0.2%. Trading volume reached 13,000 lots, and open interest reached 291,000 lots. Overnight, the most-traded SHFE copper 2507 contract opened at 78,640 yuan/mt, hitting a high of 78,700 yuan/mt at the beginning of the session before fluctuating downward to touch a low of 78,500 yuan/mt during the session. It fluctuated rangebound near the close and eventually closed at 78,610 yuan/mt, down 0.01%. Trading volume reached 19,000 lots, and open interest reached 181,000 lots. On the macro front, the US Fed kept interest rates unchanged as expected. In its statement, policymakers maintained their expectation of two interest rate cuts this year, but the number of officials expecting no rate cuts this year increased, and the expectation of rate cuts next year was reduced to one. Powell continued to emphasize uncertainties and predicted that "high inflation" would emerge in the coming months. The US dollar index rose, exerting bearish pressure on copper prices. On the fundamental front, spot premiums for copper cathode fluctuated significantly, with notable differences among brands. Yesterday, suppliers rushed to sell due to concerns about subsequent warrant outflows, and Russian copper was also sold at low prices, impacting the market. It is expected that there will still be downside room for premiums after warrant outflows today. In summary, given the presence of bearish factors, it is expected that copper prices will struggle to continue rising today.
Aluminum
Futures Market: On the previous trading day's night session, the most-traded SHFE aluminum 2507 contract opened at 20,650 yuan/mt, with a high of 20,650 yuan/mt, a low of 20,590 yuan/mt, and closed at 20,645 yuan/mt, down 35 yuan/mt or 0.17% from the previous close. On the previous trading day, LME aluminum opened at $2,549/mt, with a high of $2,560.5/mt, a low of $2,537.5/mt, and closed at $2,546.5/mt, up $1.5/mt or 0.06%.
Summary: On the macro front, the US Fed maintained interest rates unchanged as expected. Fed Chairman Powell stated at a press conference that the price increases triggered by tariffs would become more pronounced in the coming months, and the Fed would need to be confident that inflation was declining before initiating an interest rate cut. On the fundamentals side, domestic operating capacity of electrolytic aluminum remained stable, with a decrease in casting ingot volume contributing to the continued destocking of domestic aluminum ingot inventory. On the cost side, there were expectations of weakening prices for alumina and auxiliary materials, leading to diminished cost support for electrolytic aluminum. On the demand side, there was dual pressure from domestic seasonal weakness and trade uncertainties, which would cause the operating rate of aluminum processing enterprises to decline under pressure in the short term. Overall, the current low inventory and expectations of a higher proportion of liquid aluminum provide strong support for aluminum prices. However, the off-season pressure on the demand side limits upside room, and spot aluminum ingots in major consumption areas may soon face a situation of weak supply and demand. In the short term, aluminum prices are expected to fluctuate at highs.
Lead
Overnight, LME lead opened at US$1,983/mt. With prominent overseas geopolitical conflicts and the US Fed's June interest rate decision meeting expectations by remaining unchanged, LME lead fluctuated downward throughout the day after opening, hitting a low of US$1,971/mt, the lowest in nearly half a month. Until the late night session, LME lead stopped falling and rebounded, almost recovering the daytime losses. It finally closed at US$1,989.5/mt, up 0.68%.

Overnight, the most-traded SHFE lead 2507 contract opened at 16,850 yuan/mt. Boosted by the news that the SHFE would allow more investors to participate in lead futures, SHFE lead fluctuated upward. However, with limited fundamental support, SHFE lead failed to regain the 16,900 yuan/mt level and finally closed at 16,845 yuan/mt, up 0.06%. Its open interest stood at 38,409 lots, decreasing by 1,645 lots from the previous trading day.
Inventory: As of June 18, LME lead inventory increased by 2,025 mt to 289,475 mt. SHFE lead warrant inventory stood at 44,387 mt, decreasing by 1,116 mt from the previous day.
Recently, the global lead supply has gradually shown a surplus trend, with overseas inventories once again approaching the 290,000 mt mark. Although the domestic fundamentals have improved somewhat due to production cuts and suspensions on the supply side, the impact of the traditional consumption off-season has not significantly improved, becoming the main factor dragging down lead prices. Yesterday, the SHFE allowed overseas investors to participate in lead futures and options trading, which may increase the trading activity in the lead market to a certain extent and provide a short-term boost to lead prices. However, the ultimate trading logic still needs to focus on the trend of fundamental changes.
Zinc
Overnight, LME zinc opened at $2,636.5/mt. Early in the session, LME zinc rapidly rose to a high of $2,660/mt. Subsequently, its price center fluctuated around $2,655/mt. During European trading hours, LME zinc plunged below the daily average line to a low of $2,631/mt. Then, its price center fluctuated around $2,637/mt. It finally closed up at $2,643.5/mt, up $7/mt or 0.27%. Trading volume decreased to 89,509 lots, and open interest decreased by 3,356 lots to 208,000 lots. Overnight, LME zinc recorded a long upper shadow bullish candlestick, with the 20/60-day moving averages exerting pressure above. The US dollar index first fell and then rose overnight before the US Fed announced its interest rate decision. Meanwhile, tensions in the Middle East led to strong risk-averse sentiment in the market, causing LME zinc to rise first and then fall, maintaining a fluctuating trend.
Overnight, SHFE zinc opened lower with a gap at 21,945 yuan/mt. After opening, it immediately dropped to a low of 21,920 yuan/mt. Subsequently, it rapidly rose to a high of 22,020 yuan/mt. Then, as bulls reduced their positions, SHFE zinc fell to near the daily average line, with its price center fluctuating upwards around 21,960 yuan/mt. It finally closed down at 21,955 yuan/mt, down 105 yuan/mt or 0.48%. Trading volume decreased to 46,384 lots, and open interest decreased by 6,064 lots to 91,164 lots. Overnight, SHFE zinc recorded a small bullish candlestick, with the 20/60-day moving averages exerting pressure above and the 5-day moving average providing support below. Driven by the LME market, SHFE zinc opened lower with a gap overnight. The Lujiazui Forum officially opened yesterday, and the central bank announced eight major financial opening-up measures, releasing certain positive macro signals. However, the current fundamental end-use demand is weakening, and there are still expectations of ample supply. Zinc prices are expected to remain in the doldrums in the short term.

Tin
Futures Market: The most-traded SHFE tin contract (SN2507) hit bottom and rebounded during the night session, closing at 264,150 yuan/mt, up 0.27% from the previous day.
Macro: (1) The US Fed maintained interest rates unchanged for the fourth consecutive time at its June policy meeting. The dot plot indicated two interest rate cuts this year, but the number of officials expecting no rate cuts this year rose to seven, and the expected number of rate cuts next year was reduced to one. Powell continued to emphasize uncertainties, stating that the current economic situation warrants a wait-and-see approach. He also anticipated tariff-driven inflation to rise in the coming months. (2) According to Yonhap News Agency, citing a plan reported by South Korea's Ministry of Science and ICT to the Presidential National Policy Planning Committee, the South Korean government will invest 16.1 trillion won in the AI sector over the next five years. It will ensure the secure supply of 50,000 GPUs and build AI data centers. The government will support the development of AI models and make them accessible to all citizens. (Bullish ★) (3) The "Several Policy Measures to Support the High-Quality Development of the Integrated Circuit Industry in Guangzhou Development Zone and Huangpu District" was issued, aiming to help build the core area of China's third pole for the integrated circuit industry. The measures include optimizing the industrial development layout, achieving breakthroughs in chip design, specialty processes, advanced packaging and testing, EDA tools, equipment, and parts, creating an entire industry chain covering design, manufacturing, materials, equipment and parts, packaging and testing, and establishing a comprehensive integrated circuit industry cluster. (Bullish ★)
Fundamentals: (1) Supply-side disruptions: The overall supply of tin ore in major producing areas such as Yunnan has tightened. As June progresses, some smelters are considering halting production for maintenance or slightly cutting production. (Bullish ★) (2) Demand side: Recently, as tin prices have returned to the 260,000 yuan threshold, most downstream enterprises have seen a decrease in orders and a weakening of purchase willingness.
Spot Market: Traditional sectors such as consumer electronics and automotive electronics have entered the off-season. Orders are mainly in "small batches and multiple frequencies." Downstream enterprises have low acceptance of high prices, and purchases are only made to meet immediate needs. Demand for tinplate and chemicals remains stable, but high prices have suppressed downstream purchase willingness. Trading in the spot market is sluggish, with daily trading volume of just over ten metric tons.