SMM Morning Comment For SHFE Base Metals (Feb 13)

SHANGHAI, Feb 13 (SMM) –

Copper

Overnight, LME copper opened at $9,396.5/mt, fluctuated rangebound initially, then dipped to $9,369.5/mt. During the session, it surged sharply and touched a high of $9,490/mt near the close, before pulling back slightly to settle at $9,469/mt, up 1.2%. Trading volume reached 17,000 lots, and open interest stood at 291,000 lots. Overnight, the most-traded SHFE copper 2503 contract opened at 77,100 yuan/mt, fluctuated rangebound initially and dipped to 76,930 yuan/mt, then fluctuated upward throughout the session, touching a high of 77,610 yuan/mt near the close and finally settling at 77,610 yuan/mt, up 1.07%. Trading volume reached 24,000 lots, and open interest stood at 181,000 lots. Macro side, US January CPI data exceeded expectations across the board, but Powell cautioned against overreacting and maintained a cautious stance on interest rate cuts. Before Powell's remarks, Trump urged the US Fed to cut interest rates, stating that such a move would complement upcoming policies. As a result, the US Fed may have to adjust rates in response to tariff policies. Additionally, two hours after the data release, Trump and Putin held a call, agreeing to negotiate an end to the Russia-Ukraine war. This news boosted the euro significantly, pressured the US dollar, and supported copper prices. Fundamentally, the market saw relatively small fluctuations yesterday. With the price spread between near-month contracts remaining around CNY 200/mt and market expectations for destocking in distant months, suppliers mostly opted to wait for delivery or position themselves for distant months, showing low willingness to sell. On the consumption side, copper prices fell back from highs, and downstream purchasing interest was moderate, leading to weak spot market activity in the short term. In terms of prices, copper prices are expected to have further upside room today.

Aluminum

Overnight, the SHFE aluminum 2503 contract opened at 20,530 yuan/mt, with a high of 20,590 yuan/mt and a low of 20,490 yuan/mt, closing at 20,585 yuan/mt, flat from the previous day. Yesterday, LME aluminum opened at $2,635.5/mt, with a high of $2,637.5/mt and a low of $2,607/mt, closing at $2,626/mt, down $12.5/mt or 0.47%.

On the macro front, after the release of January CPI data that exceeded expectations across the board, the US dollar index rose briefly but ultimately closed up 0.05% at 107.98, as Trump may soon sign a reciprocal tariff executive order. EU sanctions intensified, and US tariffs exerted pressure, leading to potential structural adjustments in the global aluminum market in the short term. Continuous attention is needed on changes in US-EU trade policies and demand trends in major consumer markets. On the fundamentals side, the supply side of aluminum faces renewed pressure from production resumption, 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 costs have fallen below 17,200 yuan/mt, with industry profits exceeding 3,300 yuan/mt. On the inventory side, post-holiday inventory buildup continues, with inventories expected to increase rapidly during the week. On the demand side, this week, 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 top-tier enterprises, which have accelerated their resumption of work, providing support for demand. Additionally, due to financial constraints and limited orders on hand before the holiday, stockpiling was relatively low. After the holiday, there may be some stockpiling sentiment. With the end of the Chinese New Year holiday, aluminum processing enterprises are gradually resuming work and production, and the consumer side is expected to recover gradually. In the near term, focus on the impact of tariff events, post-holiday aluminum ingot inventory changes, and the pace of downstream resumption of work. SHFE aluminum is expected to fluctuate at highs in the short term.

Lead

Overnight, LME lead opened at $1,979/mt. Market concerns over trade friction persisted, causing the center of LME lead to shift further downward, concentrating more in the $1,970-1,980/mt range. During this period, the US dollar index jumped initially and then pulled back, suppressing the performance of base metals. LME lead eventually closed at $1,973/mt, down 0.15%.

Overnight, the most-traded SHFE lead 2503 contract opened at 17,140 yuan/mt. After the opening, long and short positions intertwined, and SHFE lead remained stuck in the 17,100-17,140 yuan/mt range until the final close at 17,100 yuan/mt, down 0.26%. Its open interest reached 38,343 lots, a decrease of 710 lots compared to the previous trading day.

Recently, the domestic lead market supply and demand have gradually recovered, with some downstream enterprises beginning to restock as needed, leading to marginal improvement in spot transactions. Meanwhile, the delayed resumption of production by medium and large secondary lead enterprises in Anhui may result in February's lead ingot supply increase falling short of expectations, supporting lead prices to fluctuate upward. Additionally, with the SHFE lead 2502 contract delivery date approaching, hidden lead ingot inventory is transitioning to visible inventory, and the risk of inventory buildup will continue to limit the upside potential of lead prices.

Zinc

Overnight, LME zinc opened at $2,826.5/mt, initially dipped to $2,821/mt, then climbed steadily after the opening, reaching a high of $2,873/mt during the night session. It subsequently hovered above the daily moving average and closed higher at $2,866/mt, up $38.5/mt or 1.36%. Trading volume increased to 10,900 lots, and open interest rose by 749 lots to 227,000 lots. Overnight, LME zinc formed a bullish candlestick, with the 10-day moving average providing support below. The US January non-seasonally adjusted CPI exceeded market expectations, but LME zinc inventory has been in continuous destocking since last year. Low inventory levels provided some support for zinc prices, and the center of LME zinc prices rebounded slightly.

Overnight, the most-traded SHFE zinc 2503 contract opened at 23,835 yuan/mt. After the opening, SHFE zinc slightly declined to a low of 23,740 yuan/mt, then rebounded from the low to move above the daily moving average. Near the close, SHFE zinc reached a high of 23,885 yuan/mt and finally closed higher at 23,870 yuan/mt, up 70 yuan/mt or 0.29%. Trading volume decreased to 46,984 lots, and open interest fell by 752 lots to 89,402 lots. Overnight, SHFE zinc formed a bullish candlestick, with the 40-day moving average acting as resistance above. On the fundamentals side, zinc ingot inventory continued to build up after the Chinese New Year, but downstream enterprises have largely resumed operations after the Lantern Festival. The market holds certain expectations for post-holiday consumption. SHFE zinc hovered at highs, with ongoing attention on the recovery of downstream consumption.

Tin

Fed Chairman Powell stated that the US monetary policy actions adhere to the dual mandate of maximizing employment and stabilizing prices. The Federal Open Market Committee (FOMC) maintained the federal funds rate target range at 5.25%-5.5% for 14 months before lowering the policy rate by a full percentage point since last September. Considering the progress on inflation and the cooling of the labour market, this policy adjustment is deemed appropriate. Meanwhile, we continue to reduce the size of the US Fed's securities holdings. In the futures market, SHFE tin prices fluctuated downward during yesterday's daytime session. By the close of the daytime session, the price of the most-traded SHFE tin contract stabilized at around 257,000 yuan/mt. During the night session, SHFE tin prices opened significantly higher and remained range-bound at high levels before adjusting to around 259,500 yuan/mt by the close. The overall open interest of SHFE tin contracts rebounded, reflecting increased market participation. However, the spot market remained relatively quiet. Considering that the Lantern Festival has passed and most end-user enterprises have resumed work after the Chinese New Year holiday, downstream demand for tin ingots is expected to increase, which may subsequently boost spot market transactions.