SMM Morning Comment For SHFE Base Metals On Apr 23

SHANGHAI, Apr 23 (SMM) –

Copper

Overnight, LME copper opened at $9,908/mt and rose to $9,988/mt, but then fell to $9,805/mt before closing at $9,853/mt, down 0.22%. Trading volume was 30,000 lots and open interest stood at 335,000 lots. The most-traded SHFE 2406 copper contract opened at 79,710 yuan/mt, and rose to 79,730 yuan/mt, but dipped to 78,910 yuan/mt before closing at 79,340 yuan/mt, down 0.92%. Trading volume was 78,000 lots and open interest stood at 205,000 lots. On the macro level, ECB took a hawkish stance and the interest rate cut is expected to exceed 100 basis points this year. At the same time, oil prices dropped and copper prices fell slightly. Fundamentally, domestic smelters have entered a maintenance period. In addition, smelters have increased exports recently, so supply is expected to decrease WoW. In terms of consumption, high copper prices continue to suppress downstream consumption, and weigh on the operating rates of downstream processing products. As of April 22, SMM copper inventory in China's major regions increased by 200 mt to 403,700 mt from April 18. On the whole, with financial support in the short term, copper prices are expected to remain high.

Aluminum

Overnight, the most-traded SHFE 2406 aluminum contract opened at 20,500 yuan/mt, with high and low at 20,605 yuan/mt and 20,455 yuan/mt before closing at 20,530 yuan/mt, down 45 yuan/mt or 0.22%. LME aluminum opened at $2,661/mt yesterday, with its high and low at $2,688/mt and $2,648.5/mt respectively before closing at $2,658/mt, down $2.5/mt or 0.09%.

On the macro front, the market is waiting for the US Personal Consumption Expenditure (PCE) price index report to be released on Friday for clues on the prospects for US interest rate cuts. Risky assets and non-US monetary experienced an increase in volatility. In addition, the situation in Middle East intensified. The UK and the US imposed sanctions on Russian metals again, and Biden called for a 25% tariff on China’s aluminum semis, triggering turbulence in global metals market. The domestic aluminum supply rose further, but downstream demand still needs more stimulation from terminal consumption. The inventory of aluminum billets and aluminum ingots remained high. However, the domestic market prices may fluctuate at a high level amid global aluminum trade friction.

Lead

LME lead opened at $2,212.5/mt on Monday and fell to $2,155.5/mt before closing at $2,160/mt, down 2.44%.

The most-traded SHFE 2406 lead contract opened at 16,880 yuan/mt, after falling to 16,780 yuan/mt, it rose to a high point at 16,910 yuan/mt before closing down 2.52% at 16,840 yuan/mt.

Zinc

ECB Governing Council Member Centeno said that the interest rate cut may exceed 100 basis points. The market has fully expected that the Bank of England will cut interest rates of 25 basis points in August for the first time. Iranian Foreign Ministry spokesman said that Israel has received the necessary response at this stage. Polish President said that Poland is ready to deploy nuclear weapons. US Secretary of State Blinken will visit China from April 24 to 26. The People's Bank Of China will maintain the one-year and five-year LPR unchanged. Ministry of Finance of China will timely launch ultra-long-term special government bond issuance. The State Council conducted the seventh special study on deepening capital market reform.
Overnight, LME zinc opened at $2,852/mt, and rose to $2,873/mt, but then fell back to $2,801.5/mt before closing at $2826.5/mt, down $24.5/mt or 0.86%. Trading volume fell to 9,698 lots, and open interest increased by 2,545 lots to 243,000 lots. LME zinc inventory decreased by 25 mt to 256,175 mt, a drop of 0.01%. The strong US dollar index weighed on LME zinc. The macro sentiment cooled down, and LME zinc prices fluctuated at a high level. We need to keep an eye on manufacturing PMI data to be released overseas.
Overnight, the most-traded SHFE 2406 zinc contract fell to 22,355 yuan/mt after opening at 22,450 yuan/mt, but then rose to 22,680 yuan/mt before closing at 22,590 yuan/mt, down 140 yuan/mt or 0.62%. Trading volume decreased to 97,676 lots, and open interest decreased by 3,174 lots to 119,000 lots. Due to high zinc prices, downstream was not willing to purchase, putting pressure on SHFE zinc price hikes. We should pay attention to the downstream consumption and restocking during the Labour Day holiday.

Tin

Overnight, SHFE 2405 tin contract fell sharply, closing at 271,150 yuan/mt, down 2.52%.

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 600-3,000 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 stayed at highs yesterday, and downstream companies mostly took a wait-and-see attitude. In the afternoon, tin price fell back, and companies restocked only as needed. Few deals were heard among traders.

Nickel

On Monday, the most-traded SHFE nickel contract opened at 143,400 yuan/mt, and closed at 143,580 yuan/mt, up 2,670 yuan/mt compared with the last trading day. Trading volume rose 238,462 lots to 428,973 lots, and open interest increased by 60,732 lots to 106,773 lots. The most-traded SHFE nickel contract fluctuated upward to the highest at 148,270 yuan/mt after opening before falling. In the afternoon, it dropped to fluctuate around the closing price, with the final increase of 3.09%.