SMM Morning Comment For SHFE Base Metals (Jun 26)

SHANGHAI, Jun 26 (SMM) –

Copper

Overnight, LME copper opened at $9,692.5/mt, reaching a high of $9,738.0/mt and a low of $9,684/mt, before closing at $9,727.0/mt, up 0.65%. Trading volume reached 14,874 lots, with open interest at 286,436 lots. The overall trend fluctuated initially before fluctuating upward, with a pullback after a late-session surge. Overnight, the SHFE copper 2508 contract opened at 78,600 yuan/mt, reaching a high of 78,740 yuan/mt and a low of 78,510 yuan/mt, before closing at 78,720 yuan/mt, up 0.36%. Trading volume reached 25,683 lots, with open interest at 175,229 lots. The overall trend fluctuated, surging initially, then pulling back before rising again, showing a fluctuating upward trend. On the macro front, Trump announced that he believed the war between Israel and Iran had ended, and that the US would hold talks with Iran next week, not considering a nuclear agreement necessary. This eased market risk-aversion sentiment. Additionally, the market widely expects the US Fed to soon resume its interest rate cut cycle, with the US dollar index falling, supporting copper prices. On the fundamental side, most enterprises have gradually completed their inventory clearance plans, with limited marketable supply currently available. It is expected that prices for some scarce supplies will rise today. Overall, with the US dollar falling significantly, copper prices are expected to be supported today.

Aluminum

Futures Market: Last night, the most-traded SHFE aluminum 2508 contract opened at 20,340 yuan/mt, with a high of 20,380 yuan/mt, a low of 20,325 yuan/mt, and closed at 20,345 yuan/mt. Trading volume was 42,000 lots, and open interest was 253,000 lots. Last night, LME aluminum opened at $2,567/mt, with a high of $2,569/mt, a low of $2,565/mt, and closed at $2,566/mt.

Summary: On the macro front, the marginal easing of the Middle East situation, coupled with the alleviation of concerns over the shipping capacity of the Strait of Hormuz, has raised hopes for the resolution of the energy crisis, thereby weakening the cost support for electrolytic aluminum. The intensification of trade frictions between Europe and the United States may suppress global industrial product demand, dampening expectations for aluminum semis exports. On the fundamental front, domestic electrolytic aluminum operating capacity remained stable, with the proportion of liquid aluminum maintaining a high level, and the market supply of casting ingots remaining tight. On the demand side, overall, most downstream sectors are in the traditional off-season, with significant feedback on production cuts from downstream enterprises in central China. Local spot transactions have weakened, with sustained large discounts appearing in market transaction prices. The weakening of off-season demand in the PV and home appliance sectors cannot be ignored, with a noticeable decline in the operating rates of related sectors. The cable sector has experienced a decline in operating rates due to the completion of the previous delivery period and high aluminum prices. Inventory side, as of Thursday this week, there was no further replenishment of inventory, and it is necessary to continuously observe whether the destocking inflection point has officially formed. Overall, the latest social inventory of aluminum ingots has not shown further inventory buildup and remains at a low level, still providing support to the futures market. In the medium term, macro policies (such as domestic consumption stimulus and expectations for US Fed interest rate cuts) may boost demand. It is expected that aluminum prices will mainly fluctuate at highs in the short term, and subsequent focus should be on changes in inventory and demand.

Lead

Overnight, LME lead opened at $2,018/mt, rising slightly during the Asian session. Entering the European session, it continued to fluctuate upward, hitting a high of $2,049/mt before falling below the intraday average line near the close, ultimately closing at $2,031.5/mt, up $19.5/mt or 0.97%.

Overnight, the most-traded SHFE lead 2508 contract opened at 17,170 yuan/mt, rising to hit a high of 17,240 yuan/mt in early trading before consolidating. After briefly falling below 17,200 yuan/mt, it rebounded slightly to near the intraday average line, ultimately closing at 17,210 yuan/mt, up 105 yuan/mt or 0.61%.

The macro sentiment has improved, creating an overall strong operating atmosphere for non-ferrous metals. Coupled with a shift in the lead market's fundamentals due to short-term supply reductions, continuous destocking of LME inventory, and a strong bullish sentiment in futures lead, SHFE lead broke through the key 17,000 yuan/mt level this week after increased trading volume and entered an upward channel. Meanwhile, downstream consumption is in the transition period between the off-season and peak season, and some enterprises plan to raise the prices of battery products to pass on the pressure of rising lead prices. In the short term, lead prices may continue to hold up well.

Zinc

Overnight, LME zinc opened at $2,687.5/mt. Early in the session, LME zinc briefly dipped to a low of $2,685.5/mt. Subsequently, bears reduced their positions, and LME zinc fluctuated upward throughout the session, reaching a high of $2,722/mt during the night session. However, the upward momentum weakened, and the price center of LME zinc shifted downward, eventually closing up at $2,710/mt, a gain of $29.5/mt or 1.10%. Trading volume decreased to 11,290 lots, and open interest fell by 623 lots to 212,000 lots. Overnight, LME zinc recorded a large bullish candlestick, with the KDJ line opening upward. Trump announced that the US would hold talks with Iran next week, easing risk-averse sentiment. Additionally, market expectations for an interest rate cut resurfaced, weakening the US dollar and driving LME zinc higher. It is expected that LME zinc will continue to fluctuate at highs today.

Overnight, the most-traded SHFE zinc 2508 contract opened at 22,090 yuan/mt. Early in the session, SHFE zinc slightly dipped to a low of 22,030 yuan/mt. Subsequently, bulls increased their positions, and SHFE zinc oscillated along the daily average line, reaching a high of 22,100 yuan/mt during the session. SHFE zinc mainly fluctuated considerably, with fluctuations of less than 100 yuan. It eventually closed up at 22,095 yuan/mt, a gain of 50 yuan/mt or 0.23%. Trading volume decreased to 47,542 lots, and open interest increased by 98 lots to 130,000 lots. Overnight, SHFE zinc recorded a small bullish candlestick. Boosted by overseas market sentiment, SHFE zinc followed the LME zinc upward. However, domestic consumption is gradually weakening, and there are still expectations of a zinc supply surplus. It is expected that SHFE zinc will continue to fluctuate at highs today.

Tin

Futures Market: The most-traded SHFE tin contract (SN2507) rose slightly during the night session and maintained a high-level sideways trend, finally closing near 266,800 yuan/mt, up 1.8% from the previous trading day.

Fundamentals: (1) Supply-side disruptions: The overall supply of tin ore in major production areas such as Yunnan is tightening. Entering June, some smelters are considering production halts for maintenance or minor production cuts. (Bullish ★) (2) Demand-side: PV industry: After the installation rush, orders for PV tin strips in east China have declined, and the operating rates of some producers have dropped. Electronics industry: The electronics terminal market in south China has entered the off-season, coupled with high tin prices, resulting in a strong wait-and-see sentiment among terminals, with orders only meeting just-in-time procurement needs. Other sectors: Demand for tinplate, chemicals, etc., remains stable, with no unexpected growth observed.

Nickel:

Spot Market:

On June 25, the SMM 1# refined nickel price ranges from 118,050 to 121,050 yuan/mt, with an average price of 119,550 yuan/mt, up 550 yuan/mt from the previous trading day. The mainstream spot premium quotation range for Jinchuan #1 refined nickel is 2,900-3,100 yuan/mt, with an average premium of 3,000 yuan/mt, unchanged from the previous trading day. The spot premiums and discounts quotation range for electrodeposited nickel from mainstream domestic brands is 0-400 yuan/mt.

Futures Market:

The most-traded SHFE nickel contract (2507) opened higher on June 25 and recovered: it closed down 0.39% at 117,690 yuan/mt in the night session, while LME nickel closed up 0.44% at $14,905/mt; it opened higher and moved higher in the daytime session, surging rapidly to 117,930 yuan/mt during the session. As of the midday close, SHFE nickel was 117,990 yuan/mt, up 760 yuan/mt, or 0.65%.

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. Despite the support from ore prices and cost, macro risk-aversion sentiment and inventory pressure inhibit the rebound momentum.