Nonferrous metals fluctuated rangebound, observing the performance during the peak season [Institutional Commentary]

【Copper】

SHFE copper rose again on Tuesday with increased open interest, as domestic buyers placed orders at low levels to support copper prices. Spot copper was at 81,565 yuan/mt today, with Shanghai spot discounts at 15 yuan/mt and Guangdong spot premiums at 190 yuan/mt. Overnight, the new US President softened his stance on comprehensive tariffs, without mentioning copper, but uncertainties remain high. With the wide spread between LME and US prices, the market is focusing on logistics changes. LME copper inventories continued to outflow, and based on the US annual refined copper imports of 800,000 mt, the expected increase in copper imports this year could be around 400,000 mt. On the indicator front, the US February manufacturing PMI fell to 49.8, while the composite PMI exceeded expectations. Eurozone manufacturing activity warmed up to 48.7, the highest in over two years, with Germany's changes boosting market confidence. Currently, domestic supply and demand support copper prices to continue fluctuating at high levels and test further upward. SHFE copper's adjustment time is short, and the pullback is likely to be limited under peak season buying demand.

【Aluminum & Alumina】

SHFE aluminum fluctuated downward today, first falling and then rising, with spot prices maintaining slight discounts. Over the past week, social inventories of aluminum ingots and billets decreased by 35,000 mt and 13,000 mt, respectively. Aluminum ingot destocking was slightly stronger than in the same lunar period in recent years. The market has expectations for peak season consumption, but spot feedback is moderate, and aluminum billet processing fees remain low. After a significant cost reduction, higher profits require larger deficit expectations. In the short term, SHFE aluminum faces resistance at 21,000 yuan/mt, with support at the low of the recent one-month range of 20,500 yuan/mt, waiting for a directional breakout. Alumina operating capacity fluctuates at historically high levels, with limited production cuts, and the supply-demand balance remains loose. Miners' sentiment to stand firm on quotes remains strong, with Guinea ore still above $90/mt. As some northern alumina companies face cash cost losses, alumina's decline may slow before ore prices loosen further. In the short term, it may hover around 3,000 yuan/mt, with attention on spot transaction changes.

【Zinc】

LME zinc inventories continued to pull back to 153,700 mt, with the 0-3 month discount narrowing to $14.5/mt. The overseas market's fundamental data improved, which is unfavorable for the import window to open. It is expected that the domestic and overseas markets will diverge slightly in the future. SHFE zinc fluctuated at high levels, with downstream buyers cautious about high prices and spot premiums weakening. Longs reduced positions at high levels, and SHFE zinc's weighted open interest fell by 3,155 lots to 232,900 lots, with capital outflows of 82.23 million yuan. In March, domestic smelters turned profitable, and refined zinc output is expected to increase by over 50,000 mt MoM. In Q2, mine-side increments are expected to be further realized, mainly tracking the resumption of production at Portugal's AI justrel. During the traditional peak season of "Golden March and Silver April," consumption performance is moderate, but the increment is insufficient. Under the dual increase in supply and demand, SHFE zinc is likely to maintain a rangebound movement between 23,200-24,200 yuan/mt.

【Lead】

The domestic and overseas markets diverged slightly, with lead spot import losses widening to around 720 yuan/mt. LME lead inventories are at a high of 232,200 mt, and the possibility of the lead ingot import window opening in the future cannot be ruled out. The futures market weakened, and the spread between futures and spot prices narrowed to 180 yuan/mt. The news of a large smelter in Henan planning a 25-30 day maintenance at the end of March supported prices. Secondary lead smelters previously purchased raw materials at high prices, resulting in high costs, and the price difference between primary metal and scrap remained unchanged at 75 yuan/mt. Domestic smelters are profitable, maintaining high operating rates, and the raw material shortage remains unchanged. Some secondary lead smelters reduced production due to insufficient raw materials, but the overall expectation for production increase remains unchanged, with regional differences in lead ingot supply. Consumption is still in the off-season, with weak demand for car battery replacements, providing insufficient support for high lead prices. Attention is still needed on the pullback pressure near 17,880 yuan/mt.

【Nickel & Stainless Steel】

SHFE nickel rebounded slightly, with active market trading. Jinchuan premiums rebounded to 2,000 yuan/mt, while Russian nickel discounts were at 25 yuan/mt and electrodeposited nickel discounts at 100 yuan/mt. High-grade NPI prices remained strong, with Indonesian ore still affecting raw material pricing, and the latest quote was at 1,027 yuan/mtu. In terms of inventories, NPI inventories fell sharply by 6,000 mt to 23,000 mt, refined nickel inventories dropped by 1,900 mt to 47,000 mt, and stainless steel inventories slightly decreased to 990,000 mt. After the price decline, NPI remains the main support on the cost side, with strong support estimated near 130,000 yuan/mt. Technically, SHFE nickel has not yet weakened, waiting for shorts to mature.

【Tin】

SHFE tin fluctuated with a bearish line, briefly recovering 275,000 yuan/mt, with SMM spot tin at 273,700 yuan/mt today. Overnight, LME tin inventories decreased to 3,555 mt, with LME 0-3 month spot discounts at $55/mt. Currently, it is recommended that mid- and downstream buyers place orders near 275,000 yuan/mt as needed. Wa State is advancing the resumption of tin mine production, but the realization path is medium-term; the situation in the DRC remains unclear. Downstream, the market is concerned about the risk of the US imposing tariffs on chips, which may affect demand. It is inclined that tin prices will mainly fluctuate between 275,000-280,000 yuan/mt this week.