SMM Morning Comment For SHFE Base Metals (Mar 24)

SHANGHAI, Mar 24 (SMM) –
Copper
On Friday evening, LME copper opened at $9,844/mt, reaching a high of $9,884.5/mt at the beginning of the session. It then declined sharply to a low of $9,802/mt and rebounded in the end, closing at $9,852/mt, down 0.59%. Trading volume reached 18,000 lots, and open interest stood at 294,000 lots. The most-traded SHFE copper 2505 contract opened at 80,530 yuan/mt, hitting a high of 80,840 yuan/mt at the start of the session. It then fell sharply to a low of 80,190 yuan/mt and rebounded in the end, closing at 80,630 yuan/mt, down 0.62%. Trading volume reached 54,000 lots, and open interest stood at 238,000 lots. On the macro front, US Fed officials stated on Friday that they were not in a hurry to cut interest rates, leading to a rise in the US dollar index, which put pressure on copper prices. However, concerns over Trump's trade policies potentially impacting US economic growth, along with market expectations of two interest rate cuts by the Fed within the year, may continue to weigh on the US dollar, supporting copper prices. Fundamentally, the price spread structure between the SHFE copper 2404 and 2405 contracts quickly shifted to a backwardation structure, indicating the market's expectation of near-term supply tightness was gradually being realized. Meanwhile, as futures prices pulled back, downstream demand showed some improvement, and stockpiling sentiment slightly increased, with domestic social inventory expected to continue to decline over the weekend. Overall, changes in both supply and demand provided support for copper prices, but attention still needed to be paid to the speed of inventory reduction and the sustainability of downstream demand. In terms of pricing, the final deadline for Trump's reciprocal tariffs was approaching, and the current tariff expectations continued to influence copper prices, with a focus on changes in US economic data. Under the resonance of macro and fundamental factors, it was expected that there would be limited downside for copper prices today.
Aluminum
The most-traded SHFE aluminum 2505 contract opened at 20,665 yuan/mt, reached a high of 20,720 yuan/mt, a low of 20,650 yuan/mt, and closed at 20,655 yuan/mt, down 140 yuan/mt, or 0.67%. LME aluminum opened at $2,662/mt, hit a high of $2,668/mt, a low of $2,620.5/mt, and closed at $2,624.5/mt, down $32.5/mt, or 1.22%.
Fundamentally, the aluminum industry chain remains bullish, with the seasonal destocking trend in "Golden March and Silver April" becoming clearer, and end-use consumption in NEVs steadily growing. The import window remains closed, and net primary aluminum imports for January-February 2025 were significantly lower YoY. Currently, aluminum prices still show LME outperforming SHFE, with the import window closed and import losses hovering around 2,600 yuan/mt. Overseas suppliers' willingness to clear and ship to China has decreased, and SMM expects that domestic primary aluminum imports in March will mainly be long-term contracts, with little increase in net imports. SMM believes that continued destocking over the weekend and domestic policy support will prop up short-term prices. If expectations for US Fed interest rate cuts rise or trade relations between the US and Europe further ease, aluminum prices may continue to fluctuate upward, but whether SHFE aluminum can return to the 21,000 yuan/mt level still requires further upward momentum. Close attention should be paid to changes in US tariff policies and the actual release of downstream demand.
Lead
On Friday, LME lead opened at $2,054/mt. After the US Fed's interest rate meeting signaled no quick rate cuts, the US dollar index hit a two-week high, and non-ferrous metals generally turned negative. LME lead fell sharply for two consecutive days, nearly erasing all gains from the previous two weeks, with the intraday low reaching $2,015/mt. Towards the end of the session, some shorts took profits, and LME lead finally closed at $2,027/mt, down 1.1%.

On Friday, the most-traded SHFE lead 2505 contract opened at 17,430 yuan/mt. Affected by the decline in LME lead and the inventory buildup of domestic lead ingots, SHFE lead fluctuated downward. With lead profits significantly shrinking, some traders focused on cost support. In the latter part of the trading session, SHFE lead consolidated around the 20-day average price, closing at 17,395 yuan/mt, down 0.43%; its open interest reached 61,352 lots, a decrease of 41 lots from the previous trading day.
After the delivery of the SHFE lead 2503 contract last week, the impact of lead ingot transfer to delivery warehouses on lead prices may weaken. Meanwhile, imported lead is gradually arriving and entering the spot market, providing a new source of supply. Following the pullback in domestic lead prices, the imbalance in the scrap battery market supply intensified, with smelting profits significantly shrinking, or even turning into losses, potentially providing some cost support for lead prices.
Zinc
Last Friday, LME zinc opened at $2,927.5/mt, initially rising slightly to reach $2,927.5/mt, then quickly falling. During this time, LME zinc attempted to rise above the daily average line but was resisted by increased shorts, pulling back to a low of $2,900/mt. It then recovered some losses, centering around $2,920/mt with fluctuating trends, finally closing at $2,927.5/mt, up $8.5/mt, or 0.29%. Trading volume decreased to 68,461 lots, while open interest increased by 1,834 lots to 22.5 lots. On March 21, LME zinc inventory fell by 825 mt to 154,400 mt, a decrease of 0.53%. Last Friday, LME zinc recorded a long-lower-shadow doji, with the 5-day moving average forming resistance above and the 20/60-day moving averages providing support below. As US Fed officials indicated no rush to cut interest rates, the strengthening US dollar suppressed LME zinc's upward trend, while overseas inventories decreased, maintaining a fluctuating trend for LME zinc.
Last Friday, the most-traded SHFE zinc 2505 contract opened at 23,810 yuan/mt. With increased longs, it rose slightly to 24,010 yuan/mt, then oscillated around 23,950 yuan/mt, touching a low of 23,810 yuan/mt, and finally closed at 23,980 yuan/mt, up 210 yuan/mt, or 0.88%. Trading volume decreased to 102,000 lots, and open interest fell by 729 lots to 124,000 lots. Last Friday, SHFE zinc recorded a positive candle, with the 60-day moving average forming resistance above and the 20/40-day moving averages providing support below. Due to YoY increases in both imported zinc concentrates and refined zinc, and the gradual recovery of domestic consumption, the macro outlook for promoting domestic consumption is optimistic, and zinc prices are expected to maintain a fluctuating trend in the short term.

Tin
On the macro front, the escalation of armed conflicts in DRC significantly impacted global tin ore supply. Alphamin's suspension of operations at its Bisie mine heightened market concerns over the supply side. Meanwhile, a weaker US dollar and favorable domestic policies also supported tin prices. In terms of the domestic tin ore market, the overall supply-demand pattern showed a tight trend. In terms of supply, although the operating rates of refined tin smelters in Yunnan and Jiangxi saw a slight rebound, they were still constrained by tight raw material supply. Since Myanmar implemented a ban on tin mining in August 2023, there was no clear timetable for resumption of production in 2025. Although Wa State released a resumption process document in February 2025, actual resumption required going through application and approval procedures, with the earliest possible increase in supply expected in H2 2025. As a result, imports of tin ore from Myanmar continued to decline, exacerbating the tightness of domestic ore sources. At the same time, imports of tin ore from DRC and Australia decreased, with volumes declining. Due to rainy season transportation issues and political instability (such as the M23 armed conflict), tin ore transportation from DRC was hindered at the beginning of 2025, affecting exports to China. On the demand side, downstream solder companies mainly engaged in just-in-time procurement, with high prices suppressing restocking willingness. However, the trade-in policy and high home appliance production schedules provided potential support for demand, with social inventory remaining at low levels. Considering the dynamics of domestic and overseas markets and policy changes, it was expected that tin prices would continue to fluctuate upward in the following week. Investors needed to pay attention to the situation in DRC, the resumption of production in Wa State, and the direction of macro policies. It was advised to operate cautiously and avoid the risk of chasing highs.