SHANGHAI, Jun 29 (SMM) – SHFE and LME base metals closed mostly with gains as the New York and San Francisco Fed governors had confidence in the U.S. economy, saying the U.S. could avoid a recession even if interest rates were raised. And the shortened quarantine period on China also boosted market confidence.

LME copper rose 0.51%, aluminium fell 0.04%, lead lost 0.75%, and zinc jumped 0.87%.

SHFE copper rose 0.23%, aluminium added 0.42%, lead lost 0.03%, and zinc jumped 1.22%.

Copper: LME copper opened at $8,483/mt on Tuesday, and once rose to $8,523/mt before falling to $8,358.5/mt. At last, the contract closed at $8,400/mt, up $43/mt, or 0.51%. Trading volume was 14,900 lots, and open interest stood at 232,000 lots.

The most-traded SHFE 2208 copper contract opened at 64,800 yuan/mt overnight, and once rose to 64,880 yuan/mt before dropping to 63,960 yuan/mt. At last, it closed at 64,210 yuan/mt, up 150 yuan/mt or 0.23%. The trading volume was 53,800 lots, and open interest stood at 135,000 lots.

On the macro front, data released on Tuesday morning showed that the SEI Consumer Confidence Index fell 4.5 points this month to 98.7, down to its lowest since February 2021. US consumer confidence fell to a 16-month low in June as concerns over high inflation led consumers to expect the economy to slow sharply or even slide into recession in the second half of the year. But the New York and San Francisco Fed governors had confidence in the U.S. economy, saying the U.S. could avoid a recession even if interest rates were raised. As such, the dollar reversed its losses to close with a gain of 0.52% on Tuesday, with an eye on the final annualized rate of U.S. real GDP for the first quarter due out today and Powell's upcoming speech at the European Central Bank forum.

In the spot market, traders sold off amid financial pressure during the semi-year settlement period, and were not interest in purchasing. The downstream was also sluggish, leading to halved spot premiums. Meanwhile, the expected inflows of imported copper as well as rising supply will suppress copper premiums as a whole.

LME copper will trade between $8,340-8,440/mt today; SHFE copper prices are expected to move between 63,800-64,300 yuan/mt. Spot premiums are likely to fluctuate between 30-90 yuan/mt.

Aluminium: The most-traded SHFE 2208 aluminium contract opened at 19,445 yuan/mt overnight, with its low and high at 19,315 yuan/mt and 19,485 yuan/mt before closing at 19,260 yuan/mt, up 80 yuan/mt or 0.42%.

LME aluminium opened at $2,488/mt on Tuesday and closed at $2,487/mt, down $1/mt or 0.04%.

The pessimism in the macro market has eased, allowing aluminium prices to rebound. At present, trades in the spot market are relatively weak, and consumption has shown signs of weakening. This, coupled with growing supply, will pressure aluminium prices. However, domestic stimulus policies have boosted consumer confidence, which will prevent aluminium prices from falling sharply. The most-traded SHFE 2208 aluminium contract is expected to move between 18,900-19,800 yuan/mt on today.

Lead: LME lead ended 0.75% lower at $1,972/mt in the overnight trading after opening at $1,987.5/mt and trending lower to $1,965.5/mt due to the rising US dollar index. The open interest increased by 1,488 lots to 92,872 lots.

The most-traded SHFE lead 2208 contract fell 0.03% at 15,185 yuan/mt in the overnight trading after moving between 15,175 yuan/mt and 15,285 yuan/mt. The open interest decreased by 695 lots to 48,669 lots.

Zinc: LME zinc closed at $3,358/mt Tuesday, up $29/mt or 0.87%. The open interest added 572 lots 199,000 lots. LME zinc is expected to move between $3,340-3,390/mt today. Overnight LME inventory fell 200 mt to 81,525 mt, down 0.24%. The longs increased their positions after zinc prices corrected following crude oil prices.

The most traded SHFE 2208 zinc contract closed at 24,130 yuan/mt overnight, up 290 yuan/mt or 1.22%. The open interest rose 3,204 lots to 112,532 lots. SHFE zinc is expected to move between 23,800-24,300 yuan/mt, and domestic Shuangyan zinc in premiums of 60-70 yuan/mt over SHFE 2207 contract. On the whole, spot transactions were modest, and it is advised to stay wait-and-see before the sentiment stabilizes amid lingering supply tightness and energy shortage.

Overnight, US consumer confidence fell to its lowest in 16 months in June, but Fed officials remain confident in the economy as Wall Street's inflation bets begin to fall; the ECB president promised to activate the first line of defence against the debt market crisis on Friday. Li Keqiang called for a speedy reduction in unemployment; the Brown Book showed an increase in borrowing by China's transport and construction companies, perhaps indicating that fiscal stimulus is working; Hong Kong is reported to be considering shortening hotel quarantine times for inbound travellers.

Tin: Domestic tin inventory under SHFE warrants rose sharply due to poor trades in the spot market. LME tin inventory increased slightly. The import profit window remained open, and imported tin was still quoted at small discounts. The most-traded SHFE 2208 tin contract moved sideways at lows overnight. Although the open interest of the SHFE 2207 tin contract decreased sharply, the 2208 tin contract did not attract much attention, either. Given the weak spot market and resistance at higher level, the most-traded SHFE 2208 tin contract is likely to hover at lows.

Nickel: On the supply side, pure nickel supplies from some nickel sulphate manufacturers started to circulate in the market, and a few imports will arrive this week. For NPI, the market was still in oversupply amid rising production and weakening demand, pulling down NPI prices. On the demand side, transactions of stainless steel in Wuxi were still sluggish, but uncertainties still haunted the market as the futures prices have not yet bottomed. Yesterday, a number of steel mills disclosed their production cuts in the afternoon. For alloy, the demand for pure nickel was still weak due to factors like procurement cycle, but there still existed rigid demand. To sum up, short-term nickel prices will remain rangebound as there are little changes in supply and demand of pure nickel.