SMM Morning Comment For SHFE Base Metals On Mar 27

SHANGHAI, Mar 27(SMM) –

Copper

LME copper prices opened at $8863/mt and closed at $8863.5/mt last evening, up 0.01%. Quotes for highest of $8976/mt and the lowest of $8835.5/mt. Trading volume was 15,000 lots, and open interest stood at 310,000 lots. SHFE 2405 copper opened at 72250 yuan/mt overnight and fell to 71940 yuan/mt after rising to 72300 yuan/mt, closing at 72210 yuan/mt, up 0.10%. Trading volume was 26,000 lots, and open interest stood at 189,000 lots. On the macro front, the annualised S&P/CS house price index in 20 major cities in the United States in January and the monthly rate of the FHFA house price index in the United States in January were both lower than expected. The U.S. consumer confidence index also fell slightly in March, dragging down the U.S. Index, pushing up copper prices. In terms of fundamentals, in terms of consumption, the slow recovery of terminal consumption coupled with the continued impact of holding costs, dampened downstream purchasing sentiment. If copper prices can fall further, consumption may gradually recover. Overall, supply remains adequate. In terms of price, copper prices are expected to lack support under the influence of continued weak consumption.

Aluminum

Overnight, the most-traded SHFE 2405 aluminum contract opened at 19,490 yuan/mt, with high and low at 19,520 yuan/mt and 19,420 yuan/mt before closing at 19,460 yuan/mt, down 30 yuan/mt or 0.15%. LME aluminum opened at $2,329/mt yesterday, with its high and low at $2,331/mt and $2,296.5/mt respectively before closing at $2,300/mt, down $26.5/mt or 1.14%.

Summary: On the macro front, there were expectations of an interest rate cut by the European Central Bank, and the increasingly tense situation between Russia and Ukraine drove up gold prices. Fundamentally, there are expectations for an increase in production in May, but the drought in Yunnan is still unclear. The arrival of the traditional peak season and the continuous efforts of policies to drive demand boosted the operating rates of various processing sectors. Boosted by positive fundamentals and macro front, aluminum prices may swing on a strong note.

Lead

LME lead opened at $2038/mt overnight and fell by 1.25% to close at $2016/mt with highest at $2045.5/mt and the lowest point at $2016/mt.

Overnight, the most active SHFE 2405 lead contract opened at 16150 yuan/ton, with the low-end of 16120 yuan/ton, finally closing at 16150 yuan/ton, a decrease of 0.28%.

Zinc

LME zinc prices opened at $2494/mt last evening and closed down $51/mt or 2.05% at $2440/mt. Trading volume increased to 9926 lots, and open interest grew 1394 lots to 232,000 lots. LME zinc inventory dropped by 3375 mt or 1.25% to 266000 mt. U.S. durable goods orders increased more than expected in February, and the U.S. economic growth prospects in the first quarter are still optimistic. Federal Reserve officials stated that cautious interest rate cuts have not yet been digested.

The most active SHFE 2405 zinc opened at 21015 yuan/mt and fell 290 yuan/mt or 1.37% to close at 20865 yuan/mt trading with the high-end of 21035 yuan/mt and the low-end of 20855 yuan/mt. Trading volumes decreased to 57006 lots and open interest grew 1025 lots to 100,000 lots. Terminal consumption performance was poor. As of Monday, SMM data showed that domestic zinc ingot inventories accumulated. The fundamental support for zinc prices has weakened, and zinc prices fell.

Tin

SHFE 2404 tin contract rose to 223,940 yuan/mt and closed at 223,170 yuan/mt, up 0.14%.

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 400 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 continued to decline yesterday. Downstream enterprises were enthusiastic about purchasing.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 132,880 yuan/mt, and closed at 131,780 yuan/mt, down 1,550 yuan/mt. Trading volume fell by 20,976 lots, and open interest decreased by 1,689 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.