SMM Morning Comment For SHFE Base Metals On Mar 29

SHANGHAI, Mar 29(SMM) –

Copper

LME copper prices opened at $8835.5/mt and closed at $8872/mt overnight, with the highest of $8877/mt and the lowest of $8817.5/mt. Trading volume was 20,000 lots, and open interest stood at 310,000 lots. The most active SHFE 2405 copper contract prices opened at 72310 yuan/mt and finished at 72330 yuan/mt overnight, with the high-end of 72430 yuan/mt and the low-end of 72060 yuan/mt, up 0.21%. Trading volume was 33,000 lots, and open interest stood at 184,000 lots. On the macro front, SMM understood that the China Smelters Purchase Team (CSPT) held a general manager office meeting for the first quarter of 2024 in Shanghai on the morning of March 28. The CSPT group once again proposed a joint production reduction, recommending a production reduction range of 5-10%. This bolstered copper prices. In addition, affected by OPEC+'s production restriction policy and U.S. purchases, crude oil rose, driving up copper prices. In terms of fundamentals, there has been a certain decrease in goods on the supply side, but it is expected that the arrival volume of imported copper and domestic copper will be large next week, and the current supply is still relatively sufficient. In terms of consumption, due to the surge in copper prices, some downstream companies chose to lock in prices as soon as possible. Transactions have picked up slightly, but the overall market performance is still inactive. As of March 28, SMM copper inventory across major Chinese markets increased 3,600 mt from Monday to 390,900 mt. On the whole, driven by the news of production cuts, copper prices are expected to remain high.

Aluminum

Overnight, the most-traded SHFE 2405 aluminum contract opened at 19,500 yuan/mt, with its lowest and highest at 19,495 yuan/mt and 19,605 yuan/mt before closing at 19,580 yuan/mt, up 105 yuan/mt or 0.54%. LME aluminum opened at $2,300.5/mt in the previous trading day, with its high and low at $2,340/mt and $2,292/mt respectively before closing at $2,335/mt, up $32/mt or 1.39%.
Summary: On the macro front, there were growing expectations of an interest rate cut by the European Central Bank, and the increasingly tense situation between Russia and Ukraine lifted the commodity market. The traditional peak season and the continuous efforts of policies to drive demand boosted the operating rates of various processing sectors. Aluminum ingot inventory began to drop in the week. Boosted by positive fundamentals and macro front, aluminum prices may swing on a strong note.

Lead

LME lead opened at $2005.5/mt last evening and rose by 2.50% to close at $2053/mt, after hitting the lowest point at $1995/mt and the highest point at $2063/mt.

The most active 2405 lead contract prices opened at 16490 yuan/mt last night with the high-end of 16845 yuan/mt, and closed at 16805 yuan/mt, an increase of 2.81%.

Zinc

Gold hits record high again; Russia's Investigative Committee says it has obtained evidence of links between the concert hall attackers and Ukraine; Hamas Politburo members: not optimistic about reaching a ceasefire agreement in Gaza; Federal Reserve: The richest 1% in the United States China's wealth reached a record $44.6 trillion; the United States purchased 2.8 million barrels of crude oil to replenish emergency oil reserves; Premier Li Qiang: Solidly promote large-scale equipment updates and trade-in of consumer goods; the increase in ETF holdings by China was confirmed; Xiaomi announced that the standard version of SU7 is priced at 215,900 yuan, and it was set to exceed 50,000 units in just 27 minutes after it was launched.

LME zinc opened at $2445/mt yesterday evening, and hit a high of $2458.5/mt before falling back to $2425.5/mt, and closed at $2437/mt, a decrease of $10.5/mt or 0.43%. The trading volume decreased to 9022 lots, and open interest added 1631 lots to 238,000 lots. LME zinc inventory grew by 7325 mt or 2.78% to 270875 mt. The U.S. fourth-quarter economic data shows that the U.S. economy is still strong, and the market sentiment has not yet been digested by the hawkish speech of Federal Reserve officials. The U.S. dollar index was boosted by this, and the LME inventory increased again, which weakened the support for zinc prices. Pay attention to Core PCE price index released on Friday.

The most-traded SHFE 2405 zinc contract opened at 20795 yuan/mt overnight and fell to a low of 20795 yuan/mt before rallying to a peak of 20910 yuan/mt. It eventually settled at 20890 yuan/mt, up 10 yuan/mt or 0.05%. Trading volume decreased to 35852 lots, and open interest decreased by 948 lots to 94580 lots. SMM social inventory recorded a slight decrease, market sentiment improved, and SHFE zinc stabilized and rebounded. Pay attention to the actual performance of subsequent inventory and downstream consumption.

Tin

SHFE 2404 tin contract moved rangbound, closing at 222,990 yuan/mt, up 0.1%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as below. Small brand tin ingots were offered at discounts of 600-700 yuan/mt over SHFE 2404 tin contract, versus discounts of 600 yuan/mt to premiums of 200 yuan/mt for delivery brands, premiums of 400-500 yuan/mt for Yunxi brand, and discounts of 1,400 yuan/mt for imported brand tin ingots. Tin prices fell slightly yesterday, and most downstream enterprises took a wait-and-see attitude.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 128,990 yuan/mt, and closed at 130,530 yuan/mt, down 1,020 yuan/mt. Trading volume fell by 42,985 lots, and open interest decreased by 2,574 lots. From a macro perspective, the US Fed has kept the upper limit of its interest rate at 5.5%. The Fed once again maintained interest rates unchanged. Powell's speech has not disclosed when to cut interest rate. This interest rate decision will have little impact on the market. Fundamentally, the progress of nickel ore approval accelerated and production of intermediate product projects in Indonesia ramped up. The market's expectations for tight supply of raw materials began to weaken. On the other hand, affected by the sharp drop in nickel prices, transactions in the spot market picked up, and downstream purchasing sentiment recovered. Nickel price is expected to go down.