SMM Morning Comment For SHFE Base Metals On Apr 26

SHANGHAI, Apr 26 (SMM) –

Copper

LME copper prices opened at $9902/mt and closed at $9900/mt last evening, up 1.12%, with the highest of $9958/mt and the lowest of $9736/mt. Trading volume was 28,000 lots, and open interest stood at 332,000 lots. The most active SHFE 2406 copper contract prices opened at 80660 yuan/mt and closed at 79810 yuan/mt last evening, up 0.62%, with the high-end of 80780 yuan/mt. Trading volumes stood at 89,000 lots and open interest stood at 198,000 lots.

In terms of macro, the annualized quarterly rate of US GDP in the first quarter was significantly lower than expected. For the first time, traders postponed expectations of the Fed's first interest rate cut to December. Goolsbee said that a series of inflation data were higher than expected and the Fed must readjust its policies. At the same time, with copper prices at a high level and concerns about supply shortages intensifying, news came out that BHP was planning to acquire Anglo American. Market concerns may trigger a scramble for mining assets, and copper prices surged again with financial support. In terms of fundamentals, from the supply side, although smelters maintenance and increased exports have affected arrivals, the recent influx of imported non-standard copper has increased, and supply is still relatively sufficient. In terms of consumption, as the Labour Day holiday approaches, there is a certain demand for restocking in the downstream, which has led to a slight rebound in consumption. As of April 25, SMM copper inventory across major Chinese markets stood at 404,700 mt, up 1,000 mt from Monday and 1,200 mt from last Thursday. The President of Chile and Aurubis, Europe's largest refined copper producer, have recently expressed plans to expand production, which may ease supply concerns. In addition, the Shanghai Futures Exchange issued a notice on making arrangements for risk prevention related to the Labour Day holiday. It is expected that copper prices may fall today.

Aluminum

Overnight, the most-traded SHFE 2406 aluminum contract opened at 20,515 yuan/mt, with its lowest and highest at 20,355 yuan/mt and 20,530 yuan/mt before closing at 20,375 yuan/mt, up 40 yuan/mt or 0.2%. LME aluminum opened at $2,585/mt yesterday, with its high and low at $2,612/mt and $2,560.5/mt respectively before closing at $2,571/mt, down $13/mt or 0.5%.

Summary: On the macro front, the initial value of the S&P Global Manufacturing PMI in the US in April was 49.9, lower than market expectations. The resilience of the US economy loosened, the GDP growth rate in the first quarter was lower than expected, and the expectation of interest rate cuts fell again. Domestically, GDP grew by 5.3% YoY in the first quarter, but recent photovoltaic installation data performed poorly, depressing market expectations. In addition, with the ongoing international trade frictions, the exports environment for aluminum semis will deteriorate in the future. On the fundamentals, the domestic aluminum supply maintained a growth trend, the imported primary aluminum suffered severe losses, the expectation of a decline in the impact of primary aluminum imports strengthened, the downstream operation is generally stable, and the downstream enthusiasm for replenishing inventory at low prices is moderate. The spot aluminum inventory dropped during the week, providing certain support for aluminum prices. At the same time, the operating rate at domestic mine is unlikely to improve, and the alumina market prices swung on a strong note, somehow supporting aluminum prices. The aluminum market prices fluctuated amid bullish and bearish factors.

Lead

LME lead opened at $2200/mt last evening and rose by 0.34% to close at $2210/mt, with the lowest point at $2186.5/mt and the highest point at $2219/mt.

The most traded SHFE 2406 lead contract opened at 17160 yuan/mt and fell 0.12% to close at 17095 yuan/mt overnight, briefly hitting a high point at 17215 yuan/mt and the lowest point at 17060 yuan/mt.

Zinc

The annualized quarterly rate of U.S. GDP in the first quarter was significantly lower than expected; Goolsbee: The Federal Reserve must "readjust" its policy; Japanese media: The Bank of Japan will consider taking measures to reduce its purchases of government bonds; The Israeli Prime Minister approved the ground operation in Rafah; The Houthi armed forces seek to expand their operations in the Indian Ocean; U.S. Secretary of State Blinken arrived in Beijing; Shanghai Futures Exchange: Guard against systemic risks caused by large price fluctuations; ByteDance: There is no plan to sell TikTok.

Last evening, LME zinc prices opened at $2790/mt and went up to close at $2849.5/mt, up $55/mt or 1.97%, with the high-end of $2893.5/mt. Trading volume increased to 11156 lots, and open interest decreased 629 lots to 244,000 lots. LME zinc inventory dropped by 600 mt or 0.24% to 254500 mt. The U.S. GDP data for the first quarter was significantly lower than expected, dragging the U.S. dollar index downward. Non-ferrous metals were boosted.

The most active SHFE 2406 zinc opened at 23000 yuan/mt and rose 115 yuan/mt or 0.51% to close at 22665 yuan/mt last evening, with the high-end of 23010 yuan/mt and the low-end of 22620 yuan/mt. Trading volumes increased to 129,000 lots and open interest fell 3239 lots to 104,000 lots. Although the domestic zinc concentrate TC was lowered again to provide bottom support for zinc prices, weak consumption dragged down the trend of SHFE zinc.

Tin

Overnight, SHFE 2405 tin contract moved downwards after opening higher, closing at 260,350 yuan/mt, up 2.09%.

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 600-1,100 yuan/mt for SHFE 2405 tin contract, versus discounts of 0-1,000 yuan/mt for delivery brands and premiums of 200-400 yuan/mt for Yunxi brand. Tin prices fluctuated downwards yesterday, and downstream companies restocked only as needed.

Nickel

On Thursday, the most-traded SHFE nickel contract opened at 143,000 yuan/mt, and closed at 143,820 yuan/mt, up 830 yuan/mt compared with the last trading day. Trading volume fell by 37,718 lots to 269,417 lots, and open interest increased by 3,246 lots to 96,926 lots. The most-traded SHFE nickel contract fluctuated downward after opening but rose in the afternoon, with the lowest at 141,070 yuan/mt and a final increase of 1.7%.