SMM Morning Comment For SHFE Base Metals (Mar 20)

SHANGHAI, Mar 20 (SMM) –
Copper
Overnight, LME copper 3M opened at $9,932.5, initially tested the lowest price of $9,927 during the session, then fluctuated upward, reaching the highest price of $9,998.0, and finally closed at $9,997.5. Compared to the previous close ($9,902.0), it increased by $95.5, a rise of 0.96%. Trading volume was 17,485 lots, and open interest reached 288,619 lots. Overnight, SHFE copper 2505 contract opened at 81,060 yuan, initially tested the lowest price of 80,850 yuan during the session, then fluctuated upward, reaching the highest price of 81,260 yuan, and finally closed at 81,230 yuan. Compared to the previous close (80,890 yuan), it increased by 580 yuan, a rise of 0.72%. Trading volume was 40,412 lots, and open interest reached 242,320 lots. Macro side, COMEX copper has reached its highest level since May last year, with the premium of COMEX copper prices over LME copper prices expanding to a record $1,198 per mt, surpassing the previous record set on Tuesday. Driven by the price spread, copper prices continued to rise. Meanwhile, on March 20, the US Fed kept the benchmark interest rate unchanged at 4.25%-4.50%, in line with market expectations, stating that economic uncertainty has increased. The dot plot indicates that two interest rate cuts are expected in 2025, consistent with December last year. Additionally, the Fed will begin slowing the pace of balance sheet reduction starting April 1. The US dollar index jumped initially and then pulled back, which to some extent limited the rise in copper prices. Fundamentally, copper prices remained above 80,000 yuan, and during the destocking cycle, premiums remained firm. Overall market transactions were mediocre, except for the South China market, which remained active, while downstream purchasing demand was noticeably under pressure. In summary, with the US dollar index operating at low levels, COMEX copper continuing to rise, and technical buying support, copper prices are expected to remain firm today.
Aluminum
Futures Market: Overnight, the most-traded SHFE aluminum 2505 contract opened at 20,760 yuan/mt, hit a high of 20,770 yuan/mt, a low of 20,680 yuan/mt, and closed at 20,730 yuan/mt, up 25 yuan/mt or 0.12%. Yesterday, LME aluminum opened at $2,651/mt, reached a high of $2,678/mt, a low of $2,646/mt, and closed at $2,673/mt, up $22/mt or 0.83%.
Summary: From a macro perspective, the US Fed's March meeting announced no change to the benchmark interest rate, aligning with market expectations, and signaled a dovish stance for potential rate cuts within the year, boosting market risk appetite and supporting an aluminum price rebound. Domestically, policy signals remain positive, with three departments using ultra-long-term special treasury funds to stimulate NEV bus updates. On the fundamentals side, the aluminum industry chain shows multiple bullish factors. According to SMM statistics, as of March 20, domestic aluminum ingot inventory in major consumption areas stood at 839,000 mt, down 28,000 mt WoW, while LME aluminum inventory also decreased by 0.82%. The seasonal destocking trend during the "golden March and silver April" period is evident, with steady growth in end-use consumption such as NEVs. Low inventory levels and policy support are expected to sustain short-term upward price fluctuations. Continued attention should be paid to changes in US tariff policies and the actual release of downstream demand.
Lead
Overnight, LME lead opened at $2,089.5/mt, fluctuated upward during the Asian session, peaked at $2,104.5/mt in the European session, then plunged to a low of $2,080/mt before closing at $2,089/mt, down 0.12%.
Overnight, the most-traded SHFE lead 2505 contract opened at 17,750 yuan/mt, briefly touched a high of 17,760 yuan/mt in early trading, but was dragged down by the decline in LME lead, plunging to a low of 17,640 yuan/mt before closing at 17,655 yuan/mt, down 0.06%.
The supply of scrap batteries remains tight, with prices continuing to rise, providing strong support for lead prices. Secondary lead smelters face high raw material costs, narrowing the discounts on refined lead ex-factory quotations. Downstream purchases remain on a need-only basis, with attention on the impact of rising raw material prices on the profits of secondary lead smelters. Additionally, a major smelter is expected to undergo maintenance in late March, which may lead to a temporary tightening of primary lead spot supply. Overall, lead prices are likely to fluctuate upward in the short term.
Zinc
Overnight, LME zinc opened at $2,956/mt. After a brief dip at the beginning of the session, increased long positions pushed it to a high of $2,974/mt. During the European trading hours, profit-taking by longs led LME zinc to fluctuate downward. Entering the night session, the decline accelerated, hitting a low of $2,914.5/mt. By the end of the session, the center fluctuated around $2,925/mt, closing down at $2,927.5/mt, a decrease of $32.5/mt or 1.1%. Trading volume decreased to 11,549 lots, and open interest fell by 3,832 lots to 222,000 lots. Overnight, LME zinc recorded a third consecutive bearish candlestick, with the daily candlestick center shifting downward, while the 20-day moving average below provided support. The overnight US Fed meeting met expectations by maintaining the status quo, and the US dollar index jumped initially and then pulled back. Coupled with the exit of long funds, LME zinc fluctuated downward.
Overnight, the most-traded SHFE zinc 2505 contract opened lower with a gap at 23,840 yuan/mt. The influx of short funds caused SHFE zinc to fluctuate downward, with the center operating below the daily average line. During the session, it hit a low of 23,710 yuan/mt and eventually closed down at 23,750 yuan/mt, a decrease of 90 yuan/mt or 0.38%. Trading volume decreased to 70,295 lots, while open interest increased by 4,737 lots to 128,000 lots. Overnight, SHFE zinc recorded a bearish candlestick, with resistance formed by various moving averages above. Dragged down by the decline in the overseas market and the continued drop in ferrous metals prices, SHFE zinc fluctuated downward overnight. However, the absence of significant inventory buildup in the social inventory limited the decline in zinc prices.
Tin
Powell's Press Conference: The US Fed does not need to rush to adjust its policy stance and should observe based on data. It can ease or maintain a restrictive stance as needed. It is at a stage where it can cut interest rates or maintain the current significantly tight policy stance. Inflation remains slightly elevated. Further progress on inflation this year may be delayed. The baseline forecast is that inflation will be temporary. The US economy is strong, but surveys indicate increased economic uncertainty. Recent signs suggest a slowdown in consumer spending. Close attention will be paid to signs of weakness in hard data. Forecasters have slightly raised the probability of a recession, but it remains low. Labour market conditions are solid, with the overall labour market remaining balanced. Both hiring and layoff rates are at low levels, and a significant increase in layoffs could quickly translate into unemployment. Layoffs are significant for those affected but are not notable at the national level. The impact of tariffs is uncertain, with attention on the net effect of policies. Short-term inflation expectations are rising. In the night session, SHFE tin prices opened lower and trended downward, with the price center falling to around 278,000 yuan/mt. In the tin ingot spot market, trading remained sluggish yesterday, with most traders reporting poor sales and low purchasing willingness from downstream enterprises. Considering the decline in SHFE tin prices during the night session, restocking sentiment among downstream and end-user enterprises may improve, and today's spot market transactions are expected to pick up.