SMM Morning Comment For SHFE Base Metals (Apr 17)

SHANGHAI, Apr 17 (SMM) –

Copper

Futures market: Overnight, LME copper opened at $9,127.0/mt, hitting a high of $9,216.5/mt and a low of $9,028.5/mt, and closed at $9,190.2/mt (previous close: $9,137/mt). The overall trend showed initial fluctuations downward followed by a significant upward fluctuation, with a gain of 0.58%. Open interest stood at 290,126 lots. Overnight, the SHFE copper 2506 contract opened at 75,450 yuan/mt, hitting a high of 76,120 yuan/mt and a low of 75,340 yuan/mt, and closed at 76,090 yuan/mt. The overall trend was upward with fluctuations, gaining 0.71%. Trading volume was 54,130 lots, and open interest was 159,570 lots, with a daily increase of -1,127 lots (a decrease of 0.70%).

Prices: On the macro front, Fed Chairman Powell stated: "Policy is in a good place, and we need to wait for clearer data before considering adjustments. Cryptocurrencies are gradually becoming mainstream, and related regulations are expected to be relaxed. Tariffs are likely to stimulate a temporary rise in inflation, and the impact may last for a long time. The current trend is rising inflation and unemployment. Do not expect the Fed to intervene in the stock market's sharp decline. Trump's policies are constantly changing, and tariffs are higher than the Fed's highest estimates. It is understandable that the market is facing difficulties." The market's wait-and-see attitude towards the new US trade agreement and Powell's refusal to rescue the market weighed on the US dollar. Overnight, copper prices closed higher. Meanwhile, OPEC received updated compensatory production cut plans from eight countries, with daily oil production cuts of 305,000 barrels/day until June 2026. Rising crude oil prices also supported copper prices. Domestically, in Q1, GDP was 31,875.8 billion yuan, up 5.4% YoY. On the fundamentals, copper prices jumped initially and then pulled back yesterday. With a firm backwardation, spot transactions were generally deadlocked. Today, the trading center is expected to continue to decline. Overall, copper prices are expected to find support today.

Aluminum

Futures: Last night, the most-traded SHFE aluminum 2506 contract opened at 19,550 yuan/mt, with a high of 19,635 yuan/mt, a low of 19,505 yuan/mt, and closed at 19,635 yuan/mt, up 65 yuan/mt or 0.33% from the previous close. Yesterday, LME aluminum opened at $2,373/mt, with a high of $2,390/mt, a low of $2,352/mt, and closed at $2,388.5/mt, up $16.5/mt or 0.7%.

Summary: On the macro front, yesterday the US White House imposed a 245% tariff on certain Chinese goods, and China stated that it would not pay attention to it. Although the market is concerned, there is no sign of panic spreading. Recently, due to the disturbance of tariff events, US inflation and unemployment have risen together. Under dual pressure, Fed Chairman Powell stated that he needs to wait for clearer data before considering the next interest rate cut, and the monetary policy outlook is unclear. On the supply side, although operating capacity of aluminum has increased in April, the domestic capacity ceiling limits significant growth. Weekly aluminum ingot inventory fell sharply by 35,000 mt, and the acceleration of destocking continues to provide strong support for the bottom of aluminum prices. On the demand side, there is a wait-and-see sentiment in the market due to the impact of tariffs, but after the decline in aluminum prices, new orders from end-users increased slightly, and the purchasing power of processing enterprises rebounded. Aluminum outflows from warehouses performed well. In summary, the rebound in non-ferrous metals is supported by easing macro sentiment, and the continued destocking of aluminum supports aluminum prices. In the short term, aluminum prices will maintain a fluctuating trend, and subsequent attention should be paid to tariff policy adjustments and the export situation of aluminum semis and end-users.

Lead

Overnight, LME lead opened at $1,904.5/mt. During the Asian session, dragged down by the decline in SHFE lead, LME lead fluctuated downward. Entering the European session, the US announced additional tariffs on China again, and LME lead inventories surged by 17,600 mt, intensifying the decline in LME lead, which fell to a low of $1,888.5/mt. After Powell's speech, the US dollar index weakened, and LME lead also retraced most of its losses, eventually closing at $1,904/mt, up 0.11%.

Overnight, the most-traded SHFE lead 2505 contract opened at 16,695 yuan/mt. At the beginning of the session, SHFE lead weakened slightly, falling to a low of 16,650 yuan/mt. However, supported by the firm prices of domestic scrap batteries and the cost support of secondary lead, SHFE lead rebounded to above 16,700 yuan/mt in the latter part of the trading session, eventually closing at 16,730 yuan/mt, down 0.12%. Its open interest stood at 30,144 lots, a decrease of 849 lots from the previous trading day.

Recently, overseas LME lead inventories have been accumulating daily, with a buildup of 48,000 mt over the past week, putting pressure on lead prices. At the same time, as lead prices weakened, the robust demand for scrap batteries made their prices more likely to rise than fall, even rising against the trend, squeezing the smelting profits of secondary lead. Currently, secondary lead enterprises are generally in a loss-making state, which may provide support for lead prices. Additionally, the lead-acid battery market is in a deepening off-season, with producers cutting production. Attention should be paid to subsequent changes in lead ingot inventories and the lead ingot import window. In the short term, lead prices are expected to remain in a consolidation phase.

Zinc

Futures market: Overnight, LME zinc opened at $2,621.5/mt. Initially, it briefly consolidated around the daily average line before longs took profits and exited, leading to a stepwise decline. During European trading hours, it hit a low of $2,545/mt, then rebounded, with the center of gravity shifting above the daily average line by the end of the session. It closed down at $2,577.5/mt, a drop of $36.5/mt or 1.4%. Trading volume increased to 13,768 lots, while open interest decreased by 4,932 lots to 210,000 lots. Overnight, the most-traded SHFE zinc 2506 contract opened lower with a gap at 21,850 yuan/mt. Initially, it briefly dipped to a low of 21,775 yuan/mt before rebounding, with the center of gravity operating above the daily average line. It touched a high of 21,970 yuan/mt and closed down at 21,895 yuan/mt, a drop of 245 yuan/mt or 1.11%. Trading volume decreased to 83,695 lots, while open interest increased by 3,194 lots to 130,000 lots.

Macro: Powell stated that policy adjustments require more data, denying the possibility of the US Fed providing a backstop. US stocks closed sharply lower. Xi Jinping met with the Malaysian Prime Minister, stating that China-Malaysia relations are entering a "golden era" and that both countries should jointly oppose external interference. China will convene an informal meeting of the UN Security Council to condemn US bullying and the initiation of a trade war.

Zinc price forecast: Overnight, LME zinc recorded a bearish candlestick with no upper shadow, suppressed by the 5/10 daily averages. Affected by economic uncertainty and a significant increase of nearly 80,000 mt in LME zinc inventory, zinc prices fell sharply. Overnight, SHFE zinc recorded a small bullish candlestick, but the daily candlestick's center of gravity shifted downward. Overnight, SHFE zinc's center of gravity shifted downward due to large overseas deliveries, coupled with increased consumption uncertainty under tariff impacts. Shorts entered the market, and zinc prices mainly operated in the doldrums.

Tin

The US Fed has made it clear that it will not cut interest rates for the time being. Previously, when US stocks plummeted, Trump repeatedly hoped that the US Fed would cut interest rates, but the latest speech by Fed Chairman Powell poured cold water on the market. Powell once again emphasized that the US Fed will focus on preventing tariff-driven price increases from evolving into more persistent inflation. This statement reinforced the signals Powell has repeatedly highlighted: the US Fed is in no rush to adjust the benchmark policy rate. Powell issued a strong warning that day about the inflationary effects of US President Trump's trade policies. He stated that Trump's tariffs are "very likely" to stimulate a temporary rise in inflation and warned that these effects could persist for a long time. Powell said that the US faces a highly uncertain outlook, with significant risks of rising unemployment and inflation. The US Fed will assess the potential impacts of changes in government policies, observe economic behavior, and formulate monetary policy in a way that best achieves the Fed's mission objectives. Powell noted that it is difficult to evaluate the potential economic impacts of tariff increases until there is greater certainty. However, the magnitude of the tariff hikes is clearly far beyond expectations, and the economic impacts may be as well, including rising inflation and slowing economic growth. The scale and duration of these effects remain uncertain. Powell said that adjusting monetary policy on tariffs is "premature." Spot market: The spot market remained active yesterday. Most traders reported that yesterday's transactions were maintained at around two trucks, with downstream and end-user customers showing a high willingness to inquire, and most companies are still conducting some restocking. On the smelter side, most smelters have a low willingness to sell, still maintaining high listed prices.

Nickel

On April 16, the SMM 1# refined nickel price ranged from 124,650 to 127,900 yuan/mt, with an average price of 126,275 yuan/mt, up 800 yuan/mt from the previous trading day. The mainstream spot premium for Jinchuan No. 1 nickel was quoted at 2,700-3,000 yuan/mt, with an average premium of 2,850 yuan/mt, down 50 yuan/mt from the previous trading day. The premium/discount for Russian nickel was quoted at 50-400 yuan/mt, with an average premium of 225 yuan/mt, unchanged from the previous trading day. Futures market: The most-traded SHFE nickel contract closed at 124,140 yuan/mt, up 0.41% intraday. Technically, SHFE nickel broke through the 10-day moving average resistance, but the 127,000 yuan/mt resistance level has not been effectively breached. Yesterday, the nickel market continued to fluctuate upward, with spot prices rebounding further. However, the supply-demand imbalance and inventory pressure still constrained the upside room, and market sentiment remained cautious.