SMM Morning Comment For SHFE Base Metals On Apr 2

SHANGHAI, Apr 2 (SMM) –

Copper

The LME market was closed on Monday due to holiday. The most active SHFE 2405 copper contract prices opened at 72600 yuan/mt and closed at 73090 yuan/mt last evening, up 0.37%, with the high-end of 73370 yuan/mt. Trading volumes stood at 28,000 lots and open interest stood at 176,000 lots. On the macro front, due to the prospect of tightening crude oil supply in Mexico and the risk of expanding conflicts in the Middle East brought about by Israel's attack on Syria, oil prices hit a recent high, which also pushed up copper prices. Domestically, Caixin China's manufacturing PMI recorded 51.1 in March, which has been in the expansion range for five consecutive months, which is good for copper prices. In terms of fundamentals, from the supply side, more than 50% of the supply in Shanghai and Jiangsu has been registered as warehouse receipts, and the supply of tradable spot goods has begun to tighten, raising premiums. However, tight supply did not occur. On the consumption side, copper futures prices and spot quotes both rose, which hit the market's purchasing sentiment and reduced orders for processing companies. On the fundamentals, as of Monday April 1, SMM copper inventory across major Chinese markets increased 300 mt from last Friday to 391,200 mt, up 185,000 mt YoY. Due to the influence of macro sentiment, copper prices will move strongly in the near future.

Aluminum

Overnight, the most-traded SHFE 2405 aluminum contract opened at 19,760 yuan/mt, with its lowest and highest at 19,710 yuan/mt and 19,805 yuan/mt before closing at 19,725 yuan/mt, up 5 yuan/mt or 0.03%.

Summary: From a macro perspective, the US ISM manufacturing PMI data returned to the expansion territory, the Fed’s hawkish remarks have been verified by economic data, and interest rate cut expectations may be postponed again. The domestic manufacturing PMI returned to the expansion territory in March, the People's Bank of China launched standing lending facility, and the stability of the financial market will help maintain stable operation of the economy. Fundamentally, the recovery of downstream consumption is in line with expectations. Aluminum ingot inventories continued to decline this week. The operating rate of downstream enterprises improved and was expected to grow in April. Stable market demand provided support for aluminum prices.

Lead

Overnight, the London Metal Exchange was closed for the Easter Monday holiday.

The most traded SHFE 2310 lead contract opened at 16425 yuan/mt and fell 1.17% to 16405 yuan/mt, after briefly hitting a high point at 16495 yuan/mt and the lowest point at 16380 yuan/mt.

Zinc

Overnight, the US manufacturing PMI expanded for the first time since September 2022, and expectations for the Fed's June rate cut were further cut; sources: The Biden administration is considering approving $18 billion worth of arms sales to Israel; Israel launched an airstrike on the Iranian Embassy and Consulate in Syria; Mexico plans to cut oil exports; OpenAI: Allow users to use ChatGPT without registration; China's Caixin Manufacturing PMI in March has been in the expansion range for five consecutive months; No. 92 gasoline will return to the 8 yuan era; Follow-up to the "R&F Mall Gold Shop Running Away": China Gold has decided to advance payment to relevant consumers.

Overnight, the LME zinc market was closed for Easter.

The most active SHFE 2405 zinc opened at 21045 yuan/mt and fell 20 yuan/mt or 0.1% to close at 21025 yuan/mt trading with the high-end of to 21165 yuan/mt and the low-end of 21015 yuan/mt. Trading volumes decreased to 35835 lots and open interest decreased 1345 lots to 90796 lots. The Fed's interest rate cut expectations were reduced again, macro sentiment weakened, and the recovery of downstream consumer demand is still slow. SHFE zinc is expected to be weak.

Tin

Overnight, SHFE 2405 tin contract rose to 228,700 yuan/mt and closed at 228,200 yuan/mt, up 1.04%.

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 800-1,000 yuan/mt for SHFE 2405 tin contract, versus discounts of 0-800 yuan/mt for delivery brands and premiums of 0-100 yuan/mt for Yunxi brand. Tin prices moved rangbound yesterday. Most downstream enterprises placed orders at low prices and showed little purchasing interest. Few deals were heard among traders.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 131,190 yuan/mt, and closed at 131,600 yuan/mt, up 680 yuan/mt. Trading volume fell by 207 lots to 225,854 lots, and open interest decreased by 9,381 lots to 107,817 lots. The most-traded SHFE nickel contract fluctuated downwards after opening. After falling to the intraday low of 129,050 yuan/mt, it closed up 0.91%.