SMM Morning Comments (Jun 19): Base Metals Showed Mixed Price Trends The European Central Bank Raised Interest Rates By 25 Basis Points As Expected

SHANGHAI, Jun 19 (SMM) – LME and SHFE base metals showed mixed price trends

Copper: LME copper prices closed at $8,585/mt last Friday evening, a rise of 0.25%. Trading volume was 20,000 lots and open interest stood at 255,000 lots. The most active SHFE 2307 copper contract finished at 68,500 yuan/mt last Friday evening, up 0.12%. Trading volume was 25,000 lots and open interest stood at 185,000 lots. On the macro front, the European Central Bank raised interest rates by 25 basis points as expected, and the market expects the bank to raise interest rates by another 50 basis points. The rise in the euro caused the US index to dive. In addition, U.S. retail sales data showed that U.S. consumer demand remained strong, and the market expects the Fed to continue to tighten its monetary policy. SMM data shows that as of June 16, SMM copper inventory across major Chinese markets went down 4,800 mt from Monday June 12 and down 15,800 mt from two Fridays ago. The inventory was down 16,300 mt from the same period last year. The continuous reduction of warrants and limited arrivals of domestic and imported copper drove inventories in east China to fall sharply. Spot cargoes were transferred to warrants in south China, growing inventories slightly. High copper prices combined with high spot premiums is expected to weaken downstream demand. Copper prices may remain strong and will mainly affected by macro sentiment.

Lead: LME lead opened at $2,126.5/mt at last Friday’s session, and hiked to $2,135/mt, with its high of $2,145/mt, after trending lower at $2,118/mt, and finally closed up 0.33% at $2,135/mt. Open interest rose 6,253 lots to 127,000 lots compared with the previous trading day, and its trading volume decreased by 1,415 lots to 7,493 lots.

The most-traded SHFE 2307 lead contract opened at 15,415 yuan/mt at last Friday’s night session, and trended higher to 15,535 yuan/mt on elevated LME lead price, and finally closed up 0.49% at 15,505 yuan/mt. Open interest dropped by 1,797 lots to 38,661 lots, and its trading volume decreased by 44,834 lots to 19,364 lots.

On the macro front, the Federal Reserve’s semi-annual monetary policy report showed that the Fed will make decisions on further interest rate hikes, and tightening credit conditions will drag down US economic growth.

Zinc: LME zinc price slid at last Friday’ s session. Delivery to overseas warehouses continued. There was limited support from fundamentals for zinc market.  

SHFE zinc prices closed with losses at last Friday’s session. Robust ferrous metal prices prompted the galvanized plate to start construction. At the same time, Positive policies kept macro sentiment good. Under this circumstance, SHFE zinc prices will probably extend losses.  

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]