SMM Morning Comment For SHFE Base Metals (Feb 12)

SHANGHAI, Feb 12 (SMM) –

Copper

Overnight, LME copper opened at $9,358/mt, fluctuated rangebound initially, then dipped to $9,315/mt. It fluctuated upward during the session, reaching $9,366/mt near the close, and finally settled at $9,356.5/mt, down 1.02%. Trading volume reached 18,000 lots, and open interest stood at 288,000 lots. Overnight, the most-traded SHFE copper 2503 contract opened at 76,750 yuan/mt, dipped to 76,530 yuan/mt initially, consolidated during the session, and fluctuated rangebound near the close, reaching 76,860 yuan/mt before settling at 76,780 yuan/mt, down 0.65%. Trading volume reached 30,000 lots, and open interest stood at 178,000 lots.

Macro side, in his opening remarks at the Senate Banking Committee hearing, Powell stated that given the "overall strength" of the economy, low unemployment, and inflation still above the Fed's 2% target, the Fed is not in a hurry to lower short-term interest rates again, leading to a decline in copper prices. The market is also awaiting more details on potential trade tariffs from Trump. Fundamentals side, according to market sources, due to the widening price spread between futures contracts, suppliers registered a large amount of inventory as SHFE warrants before the delivery of the SHFE copper 2502 contract. Downstream demand has not fully recovered, and although inventory has decreased, cargo pick-up remains demand-driven. Post-holiday spot trading activity remained subdued. In terms of prices, the market is largely in a wait-and-see mode. The US January CPI data will be released today, and copper prices are expected to stabilize.

Aluminum

The most-traded SHFE aluminum 2503 contract opened at 20,610 yuan/mt overnight, hitting a high of 20,690 yuan/mt and a low of 20,580 yuan/mt, before closing at 20,635 yuan/mt, down 40 yuan/mt or 0.19% from the previous session. Yesterday, LME aluminum opened at $2,658.5/mt, reached a high of $2,668/mt and a low of $2,631.5/mt, and closed at $2,638.5/mt, down $22.5/mt or 0.85%.

Summary: On the macro front, intensified EU sanctions and US tariff pressures are expected to cause structural adjustments in the global aluminum market in the short term. Continued attention is needed on trade policy developments in Europe and the US, as well as demand changes in major consumer markets. Yesterday, the Shanghai municipal government held a meeting with foreign financial institutions to promote high-level financial sector opening, providing some confidence to the financial market. On the fundamentals side, the pressure of resumed production in the aluminum supply chain has re-emerged, with domestic operating capacity expected to rise slowly in February. Alumina average spot prices continued to weaken, driving aluminum costs further downward. As of now, aluminum production costs have fallen below 17,300 yuan/mt, with industry profits exceeding 3,300 yuan/mt. Regarding inventory, post-holiday inventory buildup continues, with inventories expected to increase rapidly this week. On the demand side, operating rates of leading aluminum processing enterprises rose by 5.7 percentage points WoW to 56.8%. Although it is currently the off-season, operating rates of aluminum plate/sheet, strip and foil, secondary alloy, and extrusion enterprises have all increased, especially for automotive extrusion enterprises, which are accelerating their resumption of production, providing support for demand. Additionally, due to financial constraints and limited orders on hand before the holiday, stockpiling was relatively low, and there may be some stockpiling sentiment after the holiday. As the Chinese New Year holiday ends, aluminum processing enterprises are gradually resuming operations, and the consumer market is expected to recover. In the near term, focus on the impact of tariff events, post-holiday aluminum ingot inventory changes, and the pace of downstream resumption of production. SHFE aluminum is expected to fluctuate at highs in the short term.

Lead

Overnight, LME lead opened at $1,998/mt. Following the announcement of new US tariff policies, market concerns over the economic impact of trade frictions intensified. Coupled with hawkish remarks from the Fed Chairman, LME lead pulled back from highs. Particularly during the European session, LME lead inventory increased by over 3,000 mt, further lowering the trading center of LME lead, approaching $1,970/mt. By the close, it settled at $1,976/mt, down 1.08%.

Recently, the Chinese market has been in the process of recovering after the Chinese New Year. This week, lead ingot supply and demand are expected to increase. While secondary lead smelters are gradually resuming production, the current consumption in the lead-acid battery market remains moderate. Some downstream enterprises continue to digest previous inventories of lead ingots and batteries, making it difficult for lead ingot procurement needs to quickly match the supply from resumed production at lead smelters. Lead ingot inventory is accumulating, spot discounts are widening, and short-term lead prices are under pressure, with the gap between futures and spot prices narrowing.

Zinc

Overnight, LME zinc opened at $2,850/mt. During the early session, LME zinc fluctuated around the daily moving average, reaching a high of $2,850.5/mt. During the midday session, it declined steadily, hitting a low of $2,804.5/mt during the night session. Subsequently, LME zinc rebounded above the daily moving average and ultimately closed lower at $2,827.5/mt, down by $26.5/mt or 0.93%. Trading volume increased to 9,179 lots, while open interest decreased by 1,471 lots to 226,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 10-day moving average providing support below. The market continued to worry about the impact of new US tariffs, with macro sentiment remaining bearish. The US dollar index rose initially before pulling back, causing the center of LME zinc to shift downward.

Overnight, the most-traded SHFE zinc 2503 contract opened at 23,610 yuan/mt. At the beginning of the session, SHFE zinc dipped to 23,475 yuan/mt, then slowly fluctuated upward, reaching a high of 23,645 yuan/mt near the session's end. It ultimately closed lower at 23,640 yuan/mt, down by 105 yuan/mt or 0.44%. Trading volume decreased to 47,308 lots, while open interest increased by 1,292 lots to 92,832 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the 10-day moving average forming resistance above. Macro sentiment also pressured SHFE zinc's performance, and downstream enterprises had not yet fully resumed production. Zinc ingot consumption remained weak, providing insufficient support for zinc prices, leading to a slight pullback in SHFE zinc's center.

Tin

On the evening of February 11, the National Supercomputing Internet Platform announced the launch of the "AI Ecosystem Partner Acceleration Program," offering incentives such as three months of free access to the DeepSeek API and a computing resource pool with tens of millions of core hours. According to the announcement, the platform has launched the full-featured model image of DeepSeek and is providing three months of free access to the DeepSeek API for enterprises in need. Yesterday, SHFE tin prices fluctuated downward. By the close of the daytime session, the price of the most-traded SHFE tin contract stabilized at around 257,600 yuan/mt. During the night session, SHFE tin prices opened lower but rebounded before the close to around 257,600 yuan/mt. The continuous decline in the overall open interest of SHFE tin contracts also reflects a gradual decrease in market confidence among bulls. In the spot market, as most downstream and end-user enterprises gradually resume production and operations, spot market transactions are recovering, with overall trading performance showing a rebound WoW.

Nickel

Futures Market: Nickel prices opened lower in the morning, with a decline of 1.7%, reaching a low of 124,820 yuan.

Spot Premiums: The premium for Jinchuan brand nickel slightly decreased, possibly influenced by the strengthening US dollar overseas and the Trump administration's tariffs on steel and aluminum imports, which heightened market uncertainty. Spot premiums/discounts for other nickel plate brands in the spot market showed relatively small changes overall.