SMM Morning Comments (Jun 30): Base Metals Closed Mostly With Mixed Trends

SHANGHAI, Jun 30 (SMM) –Base metals closed mostly with mixed trends

Zinc: Overnight, LME zinc price dipped. LME inventories increased by 3,100 mt, or 3.98, to 80,925 mt. With hawkish signals released by Central banks in Europe and the US, the US dollar index hiked, which dragged down LME zinc prices.

SHFE zinc prices closed with a small rise overnight. LME zinc prices weakened. Zinc concentrate supply appeared to be sufficient amid rising TCs for July. In addition, given imported zinc flowing into China, downstream sectors were in a slack season demand, still piling up social inventory. Under this circumstance, SHFE zinc price is expected to trend lower.

Lead: Overnight, LME lead opened at $2,074/mt, and plummeted to $2,050/mt amid rising US index dollar to $103.43/mt after hovering around $2,070-2,080/mt, and finally closed down 1.11% at $2,055/mt.

The most-traded SHFE 2308 lead contract opened at 15,420 yuan/mt overnight, and subsequently dipped to 15,400 yuan/mt, weighed down by falling LME lead price, and finally closed down 0.29% at 15,415 yuan/mt after hovering around 15,410-15,425 yuan/mt. Open interest dropped by 1,996 lots to 106,000 lots.

On the macro front, US economic data promoted expectations of two interest rate hikes, and the two-year US bond yield once rose by nearly 20 basis points. The US dollar index rose, hitting a two-week high.

Aluminum: The most-traded SHFE 2308 aluminum contract opened at 17,920 yuan/mt overnight, with its low and high at 17,895 yuan/mt and 17,960 yuan/mt before closing at 17,925 yuan/mt.

It fell by 60 yuan/mt, or 0.33%. LME aluminum opened at $2,174.5/mt last Friday, with its low and high at $2,148/mt and $2,183/mt respectively before closing at $2,161/mt, a drop of $15.5/mt or 0.71%.

There are growing expectations for interest rate hikes in the United States and Europe. Production resumption in Yunnan will also grow supply pressure. Aluminum ingot and billet stocks both rose after the Dragon Boat Festival due to poor demand. SHFE aluminum is expected to hover around 18,000 yuan/mt, with downside room being limited by low inventory. 

Tin: Overnight, SHFE 2308 tin contract rose rapidly to 214,420 yuan/mt, and then moved sideways, closing up 0.92% at 214,380 yuan/mt.

Nickel: SHFE 2308 nickel contract opened at 155,370 yuan/mt overnight, and closed at 155,190 yuan/mt, down 2,720 yuan/mt. Trading volume increased by 50,026 lots, and open interest increased by 9,405 lots. The central banks in the US, Europe and Japan all sent hawkish signals. The yuan exchange rate rose to above 7.26 per US dollar in the offshore market. The Chinese economic recovery undershot forecasts. Inquiries for Jinchuan nickel increased. Macro headwinds will prevent leave nickel prices from rising.

[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.]