SMM Morning Comment For SHFE Base Metals (Jun 20)

SHANGHAI, Jun 20 (SMM) –

Copper

Overnight, LME copper opened at $9,619.5/mt, hitting an intraday high of $9,635.5/mt shortly after the opening bell. It fluctuated considerably during the session, dipping to a low of $9,590/mt, before rebounding towards the close to finish at $9,619.5/mt, down 0.32%. Trading volume reached 12,000 lots, while open interest stood at 290,000 lots. Overnight, the most-traded SHFE copper 2507 contract opened at 78,160 yuan/mt, hitting an intraday high of 78,350 yuan/mt shortly after the opening bell. It then fluctuated downward, dipping to a low of 78,130 yuan/mt during the session, before rebounding towards the close to finish at 78,280 yuan/mt, down 0.27%. Trading volume reached 16,000 lots, while open interest stood at 174,000 lots. On the macro front, Israel bombed Iranian nuclear targets on Thursday. After Iran attacked an Israeli hospital overnight, it launched missiles and drones at Israel. Currently, neither side shows signs of backing down. Moreover, Trump is expected to decide within the next two weeks whether the US will intervene in the Israel-Iran conflict, escalating geopolitical tensions and driving up the US dollar index, which is weighing on copper prices. On the supply side, a significant outflow of SHFE warrants was observed yesterday, with Russian copper being sold at low prices in the market. However, the market's absorption capacity is limited, and it is expected that the low-priced supply will still be difficult to fully digest today. In terms of inventory, as of Thursday, June 5, SMM's copper inventory in major Chinese markets fell by 2,000 mt from Monday to 146,000 mt, up 1,100 mt from Thursday last week, and down 253,000 mt from 398,000 mt in the same period last year. On the price front, with macro and fundamental factors failing to form a resonance, it is expected that copper prices will struggle to stop falling and rebound today.

Aluminum

Futures Market: On the previous trading day's night session, the most-traded SHFE aluminum 2507 contract opened at 20,540 yuan/mt, with a high of 20,560 yuan/mt, a low of 20,505 yuan/mt, and closed at 20,540 yuan/mt, down 45 yuan/mt or 0.22% from the previous close. LME aluminum opened at $2,544/mt on the previous trading day, with a high of $2,549.5/mt, a low of $2,515/mt, and closed at $2,525.5/mt, down $21/mt or 0.82%.

Summary: On the macro front, the US Fed maintained interest rates unchanged on Wednesday. US Fed policymakers still expect a 0.5 percentage point interest rate cut this year, but they have slowed the pace of future rate cuts. However, Fed Chairman Powell warned against overemphasizing this outlook, noting that with the impending increase in import tariffs, "considerably high" inflation is expected in the future. Fundamentals side, the operating capacity of domestic aluminum has remained stable, with a decrease in casting ingot volume contributing to the ongoing destocking of domestic aluminum ingot inventory. On the cost side, there are expectations of weakening prices for alumina and auxiliary materials, leading to a reduction in cost support for aluminum. On the demand side, there is dual pressure from domestic seasonal weakness and trade uncertainties, which will cause the operating rate of short-term aluminum processing enterprises to decline under pressure. Overall, the current low inventory and the expectation of a higher proportion of liquid aluminum provide strong support for aluminum prices. However, the off-season pressure on the demand side limits the upside room. Spot aluminum ingots in major consumption areas may soon face a situation of weak supply and demand, with short-term aluminum prices mainly fluctuating at highs.

Lead

Overnight, LME lead opened at US$1,989.5/mt. During the Asian session, LME lead consolidated at highs but failed to break through the US$2,000/mt integer level. Entering the European session, overseas geopolitical conflicts persisted, intensifying market concerns about the economic outlook. Coupled with rising lead inventory, the center of LME lead's operation shifted downward, eventually closing at US$1,988.5/mt, down 0.05%.

Overnight, the most-traded SHFE lead 2507 contract opened at 16,920 yuan/mt. The positive news of the SHFE allowing overseas investors to participate in lead futures remained, coupled with a decline in lead warrant inventory. SHFE lead maintained a state of high-level fluctuations, oscillating mostly between 16,880-16,920 yuan/mt, and eventually closed at 16,910 yuan/mt, up 0.18%. Its open interest reached 33,573 lots, a decrease of 334 lots from the previous trading day.

Recently, most domestic secondary lead enterprises have been in a state of production reduction or suspension, coupled with an increase in maintenance at primary lead enterprises, leading to a relatively tight supply of lead ingots. Lead prices have also shown a fluctuating upward trend, with the price increase stimulating some downstream enterprises to purchase on demand. The off-season trend in the lead-acid battery market remains unchanged, with most downstream enterprises making just-in-time procurement. Especially when the lead price approaches the threshold of 17,000 yuan, downstream enterprises are more cautious about purchasing high-priced goods. Next week will be late June, and the impact of maintenance at primary lead smelters will increase. Meanwhile, as it is mid-year, some downstream enterprises also need to close accounts and settle payments, which may temporarily suspend their procurement of lead ingots. Under the situation of weak supply and demand, it is expected that lead prices will remain in a high consolidation pattern.

Zinc

Overnight, LME zinc opened at $2,636/mt. Early in the session, LME zinc continued to decline below the daily moving average, hitting a low of $2,631/mt during European trading hours. Subsequently, as bears reduced their positions, LME zinc fluctuated upward to above the daily moving average, touching a high of $2,647.5/mt at the end of the session. It finally closed up at $2,646.5/mt, up $3/mt or 0.11%. Trading volume decreased to 59,743 lots, while open interest fell by 1,497 lots to 206,000 lots. Overnight, LME zinc recorded a bullish candlestick without an upper shadow, with the 10/60-day moving averages above acting as resistance. As the US Fed held off on interest rate cuts for the fourth consecutive time, Trump expressed dissatisfaction with Powell. Meanwhile, amid market concerns over the escalation of the Israel-Iran conflict, overall risk aversion sentiment was strong, leading to a "V"-shaped reversal in LME zinc.

Overnight, the most-traded SHFE zinc 2507 contract opened higher with a gap at 21,925 yuan/mt. Early in the session, SHFE zinc immediately touched a high of 21,985 yuan/mt. Subsequently, as bulls reduced their positions, SHFE zinc rapidly declined below the daily moving average, hitting a low of 21,865 yuan/mt. Then, the center of SHFE zinc moved slightly higher, finally closing at 21,890 yuan/mt, up 25 yuan/mt or 0.11%. Trading volume decreased to 41,820 lots, while open interest fell by 1,587 lots to 86,152 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 20/60-day moving averages above acting as resistance. Affected by tensions in the Middle East and driven by the LME market, SHFE zinc opened higher with a gap. However, due to insufficient support from domestic fundamentals for zinc prices, SHFE zinc fluctuated and pulled back. Zinc prices are expected to remain in the doldrums in the short term.

Tin

Futures Market: The most-traded SHFE tin contract (SN2507) declined slightly and maintained a low-level sideways trend, eventually closing near 259,000 yuan/mt, with overall weak performance.

Macro: (1) According to the latest report released by the International Data Corporation (IDC), the shipments of robotic vacuum cleaners in the Chinese market reached 1.188 million units in Q1 2025, up 21.4% YoY. The growth rate of shipments exceeded 20% for two consecutive quarters. Affected by "national subsidies," the concentration trend of leading producers in the Chinese market was more pronounced than in the global market, accelerating market consolidation, with the market share gap among the Top 5 producers continuously narrowing. (2) On June 19, the Department of Equipment Industry I of the Ministry of Industry and Information Technology, the Quality Development Bureau of the State Administration for Market Regulation, and the Fire Supervision Department of the National Fire and Rescue Administration jointly held a video conference to strengthen the safety management of new energy vehicles (NEVs) and to study and deploy the safety management work for NEVs this year. (3) Several major US tech companies are advocating for a ten-year federal ban to prevent individual US states from formulating their own AI regulatory regulations.

Fundamentals: (1) Supply-side disruptions: The overall tin ore supply in major producing regions 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 returned to the 260,000 yuan threshold, orders from most downstream enterprises have decreased, and purchase willingness has weakened.

Spot Market: Downstream acceptance of high prices is limited. Yesterday's daytime session transactions were mainly driven by immediate needs. Although automotive electronics benefit from the increasing penetration of NEVs, overall procurement is characterized by "small batches and multiple orders," with high prices suppressing restocking willingness. After night session prices pulled back, some downstream enterprises began to build positions and restock, with orders also increasing.

Nickel:

Spot Market: On June 19, the SMM 1# refined nickel price ranged from 119,050 to 121,600 yuan/mt, with an average price of 120,325 yuan/mt, up 500 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel was 2,500-2,700 yuan/mt, with an average premium of 2,600 yuan/mt, unchanged from the previous trading day. The spot premiums quotation range for electrodeposited nickel from mainstream domestic brands was 0-400 yuan/mt.

Futures Market: The most-traded SHFE nickel contract (2507) rebounded during the night session and fluctuated rangebound during the daytime session: It closed up 0.6% at 119,050 yuan/mt during the night session, as the US Fed's interest rate decision was announced, easing macro pressure. During the daytime session, it opened higher and continued to rise, hitting a high of 119,100 yuan/mt during the session, and was temporarily reported at 118,800 yuan/mt as of the midday break, up 0.39%. LME nickel also rebounded synchronously, temporarily reported at $15,095/mt, closing up 1.07% overnight.

In the short term, nickel prices are expected to fluctuate rangebound within the 118,000-123,000 yuan/mt range. If Indonesia tightens its nickel ore policies, it may trigger a phased rebound. However, in the medium and long term, the pressure of supply surplus is difficult to resolve, coupled with a lack of incremental demand on the demand side, the upside room for nickel prices is limited.