SMM Morning Comment For SHFE Base Metals (Mar 18)

SHANGHAI, Mar 18 (SMM) –

Copper

Overnight, LME copper opened at $9,829, dipped to a low of $9,798.5 during the session, then fluctuated upward to a high of $9,880, and finally closed at $9,864.5. This marked an increase of $71.5 or 0.73% from the previous close ($9,793), with a trading volume of 14,286 lots and an open interest of 296,460 lots. Overnight, the SHFE copper 2505 contract opened at 80,270 yuan/mt, dipped to a low of 79,970 yuan/mt during the session, then fluctuated upward to a high of 80,380 yuan/mt, and finally closed at 80,370 yuan/mt. This represented an increase of 260 yuan or 0.32% from the previous close (80,520 yuan/mt), with a trading volume of 33,634 lots and an open interest of 231,565 lots. Macro side, the US February retail sales month-on-month growth recorded 0.2%, below the expected 0.6%, with the previous value revised down from -0.9% to -1.2%. The weaker-than-expected retail sales data caused the US dollar index to plunge during the session, providing support for copper prices. Additionally, the OECD lowered its global economic growth outlook, revising the US 2025 growth forecast from 2.4% to 2.2%. Fundamentally, on the last trading day of the 2503 contract, the narrowing price spread between futures contracts led to a slight recovery in trading during the morning session. However, copper prices climbed back above the 80,000 yuan mark in the afternoon, with downstream consumption under significant pressure. Meanwhile, imported copper arrivals in late March are expected to remain limited, and domestic arrivals are also constrained, with only a slight discount anticipated today. As of Monday, March 17, SMM copper inventories in major regions across China decreased by 6,500 mt from last Thursday to 349,000 mt, down 28,000 mt from the highest level this year. Furthermore, current nationwide inventories are 46,400 mt lower YoY. In summary, with economic growth expectations revised downward and retail sales data falling short of expectations, the US dollar index continues to weaken, and copper prices are expected to remain resilient today.

Aluminum

Futures Market: Overnight, the most-traded SHFE aluminum 2505 contract opened at 20,900 yuan/mt, reached a high of 20,920 yuan/mt, a low of 20,855 yuan/mt, and closed at 20,905 yuan/mt, down 20 yuan/mt or 0.10%. Yesterday, LME aluminum opened at $2,690/mt, hit a high of $2,705/mt, a low of $2,678/mt, and closed at $2,691/mt, up $2.5/mt or 0.09%.

Summary: Macro side, the EU's investigation into aluminum imports and tightening of steel tariffs, combined with weak US February retail data and the OECD's downgrade of global growth forecasts, added multiple bearish factors to market pressure. Domestically, the January-February recovery in consumption/industrial data and the Ministry of Commerce's promotion of domestic and foreign trade integration highlighted economic resilience to counter external risks. Fundamentals side, although the traditional peak season effect of "Golden March and Silver April" continues to manifest, the strong performance of domestic aluminum destocking in early March has been partially offset by aluminum prices' persistent challenge of the 21,000 yuan/mt threshold, impacting the supply-demand pattern in the aluminum industry chain. High outflows from warehouses fell back from highs, coupled with increased arrivals over the weekend, making it difficult for domestic aluminum inventory to maintain its previous strong performance in the new week. However, as destocking continues, the overall trend of inventory changes is expected to remain unchanged for now. According to SMM statistics, as of March 17, 2025, the total social inventory of aluminum ingots and billets decreased by 9,000 mt WoW to 1.162 million mt, with the sixth week of post-holiday destocking at a medium level compared to the same period in the past seven years. The cumulative inventory increase over 10 weeks before and after the Chinese New Year reached 523,000 mt, an 84.7% increase, showing mediocre performance. However, SMM emphasizes that as the peak season deepens, the marginal strengthening logic of end-user restocking momentum still exists.

Lead

Overnight, LME lead opened at $2,076.5/mt, briefly touched a low of $2,076/mt during the Asian session before fluctuating upward. During the European session, it climbed to a high of $2,100/mt, then pulled back at the close, ending at $2,084.5/mt, up 0.77%.

Overnight, the most-traded SHFE lead 2504 contract opened at a high of 17,655 yuan/mt, fell to a low of 17,570 yuan/mt in early trading, and slightly rebounded at the close, ending at 17,595 yuan/mt, down 0.28%.

Yesterday was the delivery day for the SHFE lead 2503 contract, and delivery cargoes gradually arrived at warehouses over the weekend, pushing social inventory of lead ingots above the 70,000 mt threshold to a four-month high. Recently, lead prices have fluctuated upward, with the overall center of gravity moving higher. However, spot market transactions were weaker than futures, with the spread between futures and spot prices remaining around 200 yuan/mt, prompting some suppliers to continue transferring to delivery warehouses. Meanwhile, the in-plant inventory of major primary lead smelters has fallen below 10,000 mt (as of March 13, the weekly in-plant inventory of primary lead enterprises was 5,700 mt), limiting the subsequent transfer of lead ingots to warehouses. After delivery, the inventory buildup trend in social inventory may slow. Additionally, the lead ingot import window briefly opened earlier, and certain imported lead is expected to arrive soon, which warrants attention for its impact on ingot production and inventory. Overall, lead prices may face short-term pressure and fluctuate.

Zinc

Overnight, LME zinc opened at $2,980/mt. At the beginning of the session, LME zinc quickly touched a high of $2,991/mt before its center shifted below the daily average line. During European trading hours, it attempted to break upward but failed, and its center moved downward to around $2,960/mt during the night session. By the end of the session, it dipped to $2,955/mt and ultimately closed lower at $2,960/mt, down by $25.5/mt or 0.85%. Trading volume decreased to 10,323 lots, and open interest fell by 2,347 lots to 225,000 lots. Overnight, LME zinc stopped rising and started to fall, with the KDJ indicator narrowing its opening. US February retail sales monthly rate fell short of expectations overnight, leading to increased short positions that pressured LME zinc to decline accordingly.

Overnight, the most-traded SHFE zinc 2505 contract opened at the intraday high of 24,160 yuan/mt. At the beginning of the session, long positions exited, causing SHFE zinc to drop rapidly, with its center fluctuating near the daily average line. During this period, it dipped to a low of 24,005 yuan/mt and ultimately closed lower at 24,025 yuan/mt, down by 180 yuan/mt or 0.74%. Trading volume decreased to 56,710 lots, and open interest fell by 488 lots to 124,000 lots. Overnight, SHFE zinc recorded a bearish candlestick, with support provided by the 60-day moving average below. Amid high zinc prices, downstream enterprises remained cautious in their purchases. SMM social inventory increased by 2,900 mt to 138,800 mt, limiting the upward momentum of zinc prices.

Tin

US President Donald Trump has chosen current US Fed Governor Michelle Bowman as the new Vice Chair for Supervision of the US Fed, a move welcomed by Wall Street banks and small lenders who expect Bowman to be more industry-friendly. In a social media post on Monday, Trump stated, "Michelle has been serving on the Federal Reserve Board since 2018 and has extensive expertise in handling inflation, regulation, and banking." Additionally, the M23 rebel group in the Democratic Republic of Congo (DRC), accused of being supported by Rwanda, decided not to participate in Tuesday's peace talks in Luanda, the capital of Angola. On Monday, the European Union sanctioned three Rwandan military commanders and mining agency officials, accusing them of supporting senior members of the M23 group and armed factions in eastern DRC. The M23 group criticized certain international organizations for deliberately undermining peace efforts. A spokesperson for the DRC President stated that the delegation would still attend the talks. Meanwhile, Rwanda announced it was severing ties with Belgium, the former colonial ruler, accusing Belgium of continuously harming Rwanda's interests during the ongoing conflict in the DRC. Rwanda demanded all Belgian diplomats leave within 48 hours. Belgium expressed regret and decided to take reciprocal countermeasures. During the night session, SHFE tin prices fluctuated downward before rebounding. In the tin ingot spot market, trading was relatively sluggish yesterday, with most traders reporting poor sales. The spot market saw a standstill in transactions, as most downstream enterprises opted to wait for tin prices to pull back further.