LME and SHFE base metals closed mostly with losses last night. On the macro front, the US Markit services PMI hit a 13-month high in May, showing a surge in demand for tourism and leisure in the US, and inflationary pressures still exist. In addition, the unease in the US debt ceiling negotiations made investors turn to safe-haven assets, and the dollar rose.
Copper: LME copper prices closed at $7,891/mt overnight, a decline of 2.35%. Trading volume was 27,000 lots and open interest stood at 254,000 lots. The most active SHFE 2307 copper contract finished at 62,990 yuan/mt, down 1.5%. Trading volume was 89,000 lots and open interest stood at 215,000 lots. On the macro front, the US Markit services PMI hit a 13-month high in May, showing a surge in demand for tourism and leisure in the US, and inflationary pressures still exist. In addition, the unease in the US debt ceiling negotiations made investors turn to safe-haven assets, and the dollar rose, weighing down copper prices. SHFE copper prices fell below 64,000 yuan/mt yesterday. But sellers held prices firm, and downstream buying interest was weak due to a wider price spread between SHFE front-month and next-month contracts. The overall trading was not very active. In addition, with the influx of imported copper, there was an impact on spot quotes. In view of the cargoes under warrants offered for sale, spot quotes should fall from highs. In terms of consumption, downstream purchases weakened at the end of the month. Affected by the fear of domestic and overseas economic recession, copper prices continued to fall to new lows, and are expected to remain rangebound at low levels.
Aluminium: The most-traded SHFE 2306 aluminium contract opened at 18,080 yuan/mt overnight, with its low and high at 17,790 yuan/mt and 18,080 yuan/mt before closing at 17,915 yuan/mt, up 40 yuan/mt or 0.22%.
LME aluminium opened at $2,225/mt on Wednesday, with its low and high at $2,190/mt and $2,236.5/mt respectively before closing at $2,206/mt, a drop of $13/mt or 0.63%.
On the macro level, the debt ceiling negotiations have failed to reach an agreement for now, adding to macro uncertainty. The US Fed swings on whether to raise interest rate or not. Consumption recovery is weaker than expected. Falling prebaked anode and coal prices weakened cost support to aluminium prices. SHFE aluminium may hover around 18,000 yuan/mt in the short term.
Lead: LME lead opened at $2,075.5/mt on Wednesday, and its daily high and low at $2,078/mt and $2,042/mt before closing down 1.66% at $2,044.5/mt.
SHFE 2307 lead contract opened at 15,250 yuan/mt overnight and fell back after climbing to 15,275 yuan/mt, closing down 0.46% at 15,215 yuan/mt.
Zinc: LME zinc moved around the daily moving average after opening at $2,350/mt on Wednesday, closing at $2,295/mt, down $59/mt or 2.51%. Trading volume added 68 lots to 9,346 lots, and open interest rose 1,947 lots to 188,000 lots. LME zinc met resistance at the 5-day moving average. LME zinc inventories fell further. The US index hovered at a two-month high. Overseas consumption has weakened, and the market has pessimistic expectations for demand.
Overnight, the most-traded SHFE 2307 zinc contract opened at 19,475 yuan/mt. The contract went down before closing at 19,175 yuan/mt, down 290 yuan/mt or 1.49%. Trading volume fell 67,070 lots to 120,000 lots, and open interest rose 3,610 lots to 143,000 lots. SHFE zinc touched a nearly two-year low of 19,140 yuan/mt. The overall macro atmosphere is bearish, and non-ferrous metals mostly fell. Given growing supply, poor consumption and risk aversion, SHFE zinc will have little upside room in the short term.
Tin: SHFE 2306 tin contract saw great volatility overnight, with its session low and high at 193,740 yuan/mt and 197,500 yuan/mt respectively before closing up 0.13% at 195,090 yuan/mt.
Nickel: NORNICKEL nickel premiums rose further yesterday on shrinking market supply. SMM presumes that the supply tightness will not be eased until next week. NPI prices quoted by traders and domestic NPI plants diverged. Almost all factories stopped quoting and took a wait-and-see approach, but traders lowered their quotations amid the growing stocks. On the demand side, according to SMM research, spot stainless steel suppliers cut their quotes to win deals amid the poor demand and high social inventory. Short-term stainless steel spot prices will fall. Nickel prices will move rangebound in the near term amid the upcoming inflow of imported goods into the domestic market.