SMM Morning Comment For SHFE Base Metals (Jun 24)

SHANGHAI, Jun 24 (SMM) –

Copper

Overnight, LME copper opened at $9,643.5/mt, dipping to a low of $9,615.0/mt and peaking at $9,697.0/mt, before closing at $9,694.5/mt, up 0.35%. Trading volume stood at 13,137 lots, with open interest at 286,663 lots. In terms of trend, prices initially fluctuated with a downward shift in the center before fluctuating upward, reaching a high near the close. Overnight, the SHFE copper 2507 contract opened at 78,340 yuan/mt, dipping to a low of 78,200 yuan/mt and peaking at 78,460 yuan/mt, before closing at 78,450 yuan/mt, up 0.15%. Trading volume stood at 13,276 lots, with open interest at 154,041 lots. In terms of trend, prices initially dipped before fluctuating upward, with fluctuations at a relatively high level. On the macro front, Fed officials Bowman and Goolsbee both suggested that if inflationary pressures are contained, they would support an interest rate cut in July. Goolsbee claimed that since Trump imposed tariffs on April 2, there has been a lack of significant inflationary pressure, which might allow the Fed to resume interest rate cuts. Bowman indicated that if inflation remains mild, she would support an interest rate cut in July. The US dollar index continued to decline, supporting copper prices. On the fundamental front, as of Monday, June 23, copper inventories in major regions across China tracked by SMM fell by 16,300 mt WoW to 129,600 mt. Compared with inventory changes last Thursday, inventories declined in all regions across the country, mainly due to lower arrivals and outflow of warrants. As month-end approaches, suppliers are actively selling, but the market is bearish on the outlook, expecting spot premiums to continue to decline. Overall, with the US dollar index continuing to fall, copper prices are expected to find bottom support today.

Aluminum

Futures Market: Last night, the most-traded SHFE aluminum 2508 contract opened at 20,415 yuan/mt, with a high of 20,450 yuan/mt, a low of 20,325 yuan/mt, and closed at 20,445 yuan/mt. Trading volume was 45,000 lots, and open interest was 256,000 lots. Last night, LME aluminum opened at $2,588/mt, with a high of $2,588/mt, a low of $2,564.5/mt, and closed at $2,578/mt.

Summary: On the macro front, the probability of short-term conflict escalation in the Middle East has decreased, and the premium previously driven by risk-averse sentiment may pull back. On the fundamental side, domestic operating capacity for primary aluminum remains stable, with the proportion of liquid aluminum maintaining a high level, and the market's casting ingot supply remaining tight. On the demand side, overall, most downstream sectors are in the traditional off-season state, with significant feedback on production cuts in the downstream sector in central China. Local spot transactions have weakened, and market transaction prices have shown a continuous large discount. The weakening of off-season demand in the PV and home appliance sectors cannot be overlooked, with a noticeable decline in the operating rates of related sectors. The operating rate in the wire and cable sector has also declined due to the completion of the previous delivery period and high aluminum prices. On the inventory side, the rate of destocking has slowed, and low inventory levels still provide support to the futures market. On Monday this week, there was an inventory buildup, and it is necessary to observe whether the inflection point of destocking has officially formed. However, spot premiums/discounts have gradually pulled back. Overall, in the short term, supported by expectations for US Fed interest rate cuts and low inventory levels, aluminum prices may hover at highs. However, under the pressure of geopolitical risks subsiding and inventory buildup in the fundamentals, the upside room is relatively limited. Spot premiums/discounts may fall back from highs, and it is necessary to closely monitor changes in inventory and demand in the future.

Lead

Overnight, LME lead opened at $1,992.5/mt. During the Asian session, it first declined and then rose. Entering the European session, it continued its upward trend, reaching a high of $2,010.5/mt, and eventually closed at $2,007/mt, up $12/mt or 0.6%. Overnight, the most-traded SHFE lead 2507 contract opened at 16,925 yuan/mt. After briefly consolidating around the daily moving average in the early session, it dipped to 16,870 yuan/mt, then fluctuated upward to reach a high of 16,950 yuan/mt, and finally closed at 16,905 yuan/mt, up 35 yuan/mt or 0.21%.

Lead prices have recently fluctuated upward. As the month-end approaches, some downstream enterprises are beginning to wait for new long-term contracts in the next month, limiting their spot order purchases. In terms of refined lead supply, secondary lead enterprises are generally in a state of production reduction or suspension. In late June, primary lead enterprises in North China, Southwest China, and South China underwent regular maintenance as scheduled, mostly involving delivery brands, leading to a tightening of lead ingot supply. Despite a few large downstream enterprises potentially reducing spot order purchases due to year-end account closing, social warehouses continue to show a slight decline. In the short term, both supply and demand in the lead market are weak, and lead prices are expected to continue fluctuating at highs.

Zinc

Futures Market: Overnight, LME zinc opened at $2,644.5/mt. Early in the session, LME zinc briefly dipped to a low of $2,628/mt before bulls increased their positions, driving the price up throughout the session to a high of $2,690/mt near the close. It eventually closed up at $2,686/mt, gaining $37/mt or 1.40%. Trading volume increased to 12,083 lots, while open interest rose by 1,944 lots to 210,000 lots. Overnight, the most-traded SHFE zinc 2508 contract opened at 21,875 yuan/mt. Early in the session, SHFE zinc consolidated along the daily moving average before bulls increased their positions, pushing the price up to a high of 22,030 yuan/mt. It eventually closed up at 21,995 yuan/mt, gaining 215 yuan/mt or 0.99%. Trading volume decreased to 95,930 lots, while open interest rose by 7,042 lots to 118,000 lots.

Overnight, LME zinc recorded a bullish candlestick. Iran has accepted the ceasefire proposal, reducing geopolitical conflict risks. Additionally, US Fed officials made dovish remarks, causing the US dollar to pull back and zinc prices to rise on the positive sentiment. Overnight, SHFE zinc recorded a large bullish candlestick, retracing to the 20-day moving average. Production at some smelters in South China was affected by heavy rain, but this did not change the trend of easing supply. Consumption weakened. The fundamentals were weak, putting pressure on zinc prices. However, the pace of inventory buildup fluctuated, and SHFE zinc fluctuated upward.

Tin

Futures Market: The most-traded SHFE tin contract (SN2507) fluctuated upward and remained at highs, closing near 263,000 yuan/mt, rising slightly from the previous trading day.

Fundamentals: (1) Supply-side disruptions: The overall tin ore supply in major producing areas such as Yunnan has tightened. Entering June, some smelters are considering halting production for maintenance or slightly cutting production (bullish ★). (2) Demand side: PV industry: After the installation rush ended, orders for PV tin strips in east China declined, and the operating rates of some producers dropped. Electronics industry: The electronics terminal market in south China entered the off-season. Coupled with high tin prices, end-users maintained a strong wait-and-see sentiment, and orders only met immediate needs. Other sectors: Demand in areas such as tinplate and chemicals remained stable, with no unexpected growth observed.

Nickel:

Spot Market: On June 23, the SMM 1# refined nickel price was 118,100-120,900 yuan/mt, with an average price of 119,500 yuan/mt, a decrease of 1,125 yuan/mt from the previous trading day. The mainstream spot premiums for Jinchuan #1 refined nickel were quoted in the range of 2,600-2,900 yuan/mt, with an average premium of 2,600 yuan/mt, an increase of 150 yuan/mt from the previous trading day. The spot premiums and discounts for electrodeposited nickel from mainstream domestic brands were quoted in the range of 0-400 yuan/mt.

Futures Market: The most-traded SHFE nickel contract (2507) opened at 118,190 yuan/mt, a decrease of 590 yuan from yesterday's settlement price. It continued to weaken during the trading session, closing at 117,100 yuan/mt at midday, a decrease of 1,680 yuan/mt or 1.41%.

The surplus pattern of refined nickel is difficult to reverse, and the price center may gradually move lower. It is expected that nickel prices will maintain sideways movement within the range of 115,000-121,000 yuan/mt. Support from ore prices and the cost line form the bottom, but macro risk-averse sentiment and inventory pressure inhibit rebound momentum.