SMM Morning Comment For SHFE Base Metals On Mar 13

SHANGHAI, Mar 13(SMM) –

Copper

LME copper prices opened at $8654/mt and closed at $8648.5/mt overnight, down 0.06%, with the highest prices of $8700/mt and the lowest of $8605/mt. The trading volume was 23,000 lots, and open interest stood at 285,000 lots. The most active SHFE 2405 copper contract prices opened at 69960 yuan/mt and finished at 69910 yuan/mt overnight, with the high-end of 70060 yuan/mt and the low-end of 69580 yuan/mt, up 0.29%. Trading volume was 34,000 lots, and open interest stood at 163,000 lots. On the macro front, the overall CPI in the United States unexpectedly rebounded in February, with the core CPI monthly and annual rates higher than expected. The unexpected rebound in U.S. inflation in February may force the Federal Reserve to continue to postpone expectations of interest rate cuts, dragging down copper prices. From the supply side, arrivals increased, domestic inventories continue to rise, and the overall supply remains sufficient. In terms of consumption, although inventories continue to increase, sellers of goods approaching delivery kept prices firm. In the face of high copper prices, downstream customers only purchase on demand. In terms of prices, U.S. inflation unexpectedly picked up in February, and domestic consumption was weak under the pressure of copper prices. It is expected that copper prices will have little momentum to rise.

Aluminum

The most-traded SHFE 2404 aluminum contract opened at 19,205 yuan/mt overnight, with its low and high at 19,130 yuan/mt and 19,220 yuan/mt before closing at 19,210 yuan/mt, up 30 yuan/mt or 0.16%. LME aluminum opened at $2,250/mt yesterday, with its high and low at $2,270/mt and $2,242.5/mt respectively before closing at $2,263/mt, up $11/mt or 0.49%.

On the macro level, State Council released favourable policies to boost demand. Attitude towards cutting interest rates swung in Europe and the US, which coupled with the US presidential election, bringing uncertainty to aluminum prices. In the short term, the import window for aluminium ingots closed, and inventory is likely to peak, supporting aluminum prices. We need to pay close attention to recovery in consumption during the peak season and the fluctuation of expectations for overseas interest rate cuts.

Lead

LME lead opened at $2124/mt overnight and rose by 1.20% to $2146/mt with the highest point at $2148/mt and the lowest point at $2119/mt.

Overnight, short-term SHFE 2404 lead contract opened at 16310 yuan/ton and rose to 16340 yuan/ton as short positions decreased, finally closing at 16280 yuan/ton, an increase of 0.06%.

Zinc

Overnight, LME zinc opened at $2562/mt, hitting a low and high of $2525.5/mt and $2592/mt respectively, and closed at $2550/mt, down $16/mt or 0.62%. Trading volume increased to 13483 lots, and open interest grew 5022 lots to 233,000 lots. LME zinc inventories decreased by 2100 mt to 269850 mt, a decrease of 0.77%. The overall CPI in the United States unexpectedly rebounded in February. The core CPI monthly rate and annual rate were both higher than expected. The market is worried that the expected three interest rate cuts may be reduced by one.

The most-traded SHFE 2405 zinc contract opened at 21380 yuan/mt overnight and fell to 21210 yuan/mt before rallying to a peak of 21380 yuan/mt. It eventually settled at 21370 yuan/mt, up 25 yuan/mt or 0.12%. Trading volume reduced to 44471 lots, and open interest fell by 4992 lots to 74488 lots.

Tin

SHFE 2404 tin contract fell to 218,540 yuan/mt overnight, and closed at 218,770 yuan/mt, down 0.66%.

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 against SHFE 2404 tin contract, versus discounts of 500 yuan/mt to premiums of 300 yuan/mt for delivery brands, premiums of 200-700 yuan/mt for Yunxi brand, and discounts of 1,300 yuan/mt for imported brand tin ingots. Tin prices rose slightly and then fell back in early trading yesterday, the purchasing sentiment of downstream companies remained sluggish. Few deals were heard among traders.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 138,330 yuan/mt, and closed at 140,290 yuan/mt, up 2,650 yuan/mt. Trading volume rose 177,000 lots, and open interest increased by 7,206 lots. From a macro perspective, the US non-agricultural employment population increased by 275,000 in February after seasonally adjustment, which was the lowest since November 2023. The US unemployment rate rose to 3.9% in February, the highest level since January 2022. Fed is likely to cut interest rate by 25 basis points in June. From a fundamental perspective, yesterday’s spot market transactions were weak. Given the nickel prices, downstream manufacturers still focused on destocking. The downstream orders did not improve. Nickel prices are vulnerable to decline.