SMM Morning Comment For SHFE Base Metals (Mar 11)

SHANGHAI, Mar 11 (SMM) –
Copper
Overnight, LME copper opened at $9,531.5/mt, initially fluctuating upward to an intraday high of $9,574/mt. It then fluctuated downward, hitting a low of $9,488/mt near the close before slightly rebounding to settle at $9,493/mt, down 1.14%. Trading volume reached 15,000 lots, and open interest stood at 303,000 lots. Overnight, the most-traded SHFE copper 2504 contract opened at 78,140 yuan/mt, initially reaching an intraday high of 78,320 yuan/mt. It then fluctuated downward to a low of 78,010 yuan/mt, slightly rebounded near the close, and continued to pull back, finally settling at 78,070 yuan/mt, down 0.47%. Trading volume reached 19,000 lots, and open interest stood at 164,000 lots. Macro side, Trump acknowledged that his comprehensive tariff policy might bring some "short-term" pain to Americans and did not rule out the possibility that tariff-related pain could lead to an economic recession. This statement heightened market risk aversion sentiment, causing the US dollar index to rebound, which pressured copper prices. Additionally, market concerns that US tariff policies could drag down the global economy and weaken energy demand led international oil prices to fall to a six-month low, further weighing on copper prices. Fundamentally, high copper prices have suppressed domestic downstream consumption. However, with the peak consumption season approaching, the pullback in copper prices is expected to boost downstream orders. As of March 10, SMM data showed that copper inventories in major regions nationwide decreased by 8,000 mt WoW to 360,000 mt. Notably, current domestic inventories are already below the levels of the same period last year, indicating a turning point in inventory levels. Looking ahead to this week, the opening of the export window is expected to drive an increase in exports and a decrease in imports. Coupled with a recovery in consumption during the production peak season, social inventories are expected to continue declining. In terms of prices, copper prices are expected to maintain a fluctuating and stable trend today.

Aluminum
Futures: Overnight, the most-traded SHFE aluminum 2504 contract opened at 20,905 yuan/mt, hitting a high of 20,925 yuan/mt and a low of 20,855 yuan/mt, before closing at 20,875 yuan/mt, up 5 yuan/mt or 0.02%. On Tuesday, LME aluminum opened at $2,695/mt, reached a high of $2,707.5/mt and a low of $2,683.5/mt, and closed at $2,686.5/mt, down $2.5/mt or 0.09%.
Summary: On the macro front, endless tariff disputes have raised concerns about a potential US economic recession. The market is also focused on the US Consumer Price Index data to be released on Wednesday and the Producer Price Index data on Thursday. Traders have fully priced in the possibility of a US Fed rate cut in June. Fundamentals side, domestic aluminum production is advancing, with capacity expected to be released by the end of March. On the inventory side, domestic aluminum ingot inventories declined again after the weekend, making the turning point for destocking more evident. Coupled with the "Golden March and Silver April" peak season, operating rates at aluminum processing enterprises continue to rise, strengthening support for aluminum consumption. Overall, the macro front presents a mixed picture, with domestic macroeconomic benefits remaining intact, while overseas trade barriers increase but with high uncertainty. Fundamentals show growth in both supply and demand. As the consumption peak season approaches, most sectors are seeing a rebound in orders and operating rates, along with declining aluminum ingot social inventories, providing some support for aluminum prices. In the short term, aluminum prices are expected to hover at highs, with attention on the key resistance level of 21,000 yuan/mt.
Lead
Overnight, LME lead opened at $2,022.5/mt, fluctuated upward during the Asian session, and continued to rise as shorts exited during the European session, reaching a high of $2,055/mt. Before the close, it dropped back slightly and finally settled at $2,040/mt, up $24/mt or 1.19%.

Overnight, the most-traded SHFE lead 2504 contract opened at 17,520 yuan/mt, initially hitting a high of 17,555 yuan/mt before weakening and bottoming at 17,480 yuan/mt. It then rebounded to hover near the daily moving average and eventually closed at 17,520 yuan/mt, up 105 yuan/mt or 0.60%.
This week marks the week before the delivery of the SHFE lead 2503 contract. SHFE lead strengthened, approaching the 17,500 yuan/mt level, while spot market transactions were weaker than futures, with no narrowing of the spread between futures and spot prices expected. Branded lead continued to be transferred to delivery warehouses, and social inventory of lead ingots rose as expected. On the supply side, primary and secondary lead smelters experienced both resumption and production restrictions, leading to significant regional differences in lead ingot supply. Additionally, heavy pollution weather emerged in Beijing-Tianjin-Hebei and surrounding areas, causing some secondary lead smelters to halt production. In Anhui, certain smelters might be affected by environmental protection inspections, resulting in a slight decline in supply. Furthermore, Hebei, Henan, and Shandong issued yellow and orange heavy pollution weather emergency alerts, potentially restricting vehicle transportation and tightening regional lead ingot supply (mainly reducing circulating cargoes). Attention should be paid to the recovery of lead ingot supply after the heavy pollution weather alerts are lifted.
Zinc
Overnight, LME zinc opened at $2,882/mt, initially reaching a high of $2,893.5/mt before fluctuating downward along the daily average line, hitting a low of $2,841.5/mt near the session's end, and finally closing down at $2,844.5/mt, a decrease of $37.5/mt or 1.3%. Trading volume fell to 8,622 lots, and open interest decreased by 2,390 lots to 217,000 lots. Overnight, LME zinc formed a bearish candlestick, with resistance from the 5-day moving average above. LME zinc inventory decreased by 75 mt to 160,100 mt, down 0.05%. The market continues to focus on the impact of tariffs on future demand, keeping LME zinc under pressure and trending lower. Further macroeconomic guidance is awaited.

Overnight, the most-traded SHFE zinc 2504 contract opened at 23,800 yuan/mt, initially reaching a high of 23,830 yuan/mt. After briefly fluctuating along the daily average line, it moved downward to a low of 23,720 yuan/mt, then slowly rebounded from the low, returning above the daily average line near the session's end, and finally closed down at 23,785 yuan/mt, a decrease of 50 yuan/mt or 0.21%. Trading volume fell to 39,759 lots, and open interest decreased by 611 lots to 81,935 lots. Overnight, SHFE zinc formed a bearish candlestick, with support from the 20-day moving average below. On Monday, SMM zinc inventory increased slightly by 1,800 mt WoW to 135,800 mt. The destocking trend in social inventory was sluggish, providing insufficient fundamental support for zinc prices, and SHFE zinc continued to fluctuate downward.

Tin
US inflation data to be released later this week will be key to the performance of the US dollar. Previously, Fed Chairman Powell stated that the central bank is not in a hurry to cut interest rates. On Friday, Powell downplayed concerns about US economic growth and suggested that the US Fed needs to see a weakening labour market and progress in anti-inflation efforts before cutting interest rates again. Brooks mentioned that the housing index has proven to be a tricky component of core inflation, with rents affected by California wildfires. He stated, "Overall, if the index does not improve, we may see a broad recovery of the US dollar later this week." Overall, SHFE tin prices remained in the range of 260,000-265,000 yuan/mt. In the tin ingot spot market, spot transactions were relatively sluggish yesterday, with downstream enterprises making just-in-time procurement in small quantities. Both downstream and end-user enterprises showed limited acceptance of high prices, with most downstream enterprises postponing large-scale stockpiling. Most traders reported scattered transactions combined with a small amount of post-pricing yesterday, resulting in overall low shipments.
Nickel
The mainstream spot premium quotation range for Jinchuan No. 1 nickel was 1,200-1,500 yuan/mt, with an average premium of 1,350 yuan/mt, down 75 yuan/mt from the previous trading day. The premium/discount quotation range for Russian nickel was -200 to 0 yuan/mt, with an average discount of -100 yuan/mt, down 50 yuan from the previous trading day.
Futures Market: Nickel prices rose after the opening today. As of 11:30, the closing price was 131,339 yuan/mt, up 1.46% from the previous trading day's settlement price, with a high of 132,500 yuan/mt.
Spot Premiums/Discounts: Jinchuan brand nickel fell by 75 yuan compared to the previous trading day. Demand recovery remained weaker than market expectations, prompting traders to lower prices to boost spot market transactions.
From a technical and market sentiment perspective, SHFE nickel futures contracts showed a strong performance. Recent market sentiment was relatively positive, with sentiment continuing to play a dominant role in influencing prices.
Nickel briquette prices ranged from 131,100 to 131,400 yuan/mt, with an average price of 131,250 yuan/mt, up 3,400 yuan/mt from the previous day's spot price. Nickel sulphate remained at a discount to refined nickel.