SMM Morning Comment For SHFE Base Metals (Apr 18)

SHANGHAI, Apr 18 (SMM) –

Copper

Overnight, LME copper opened at $9,133/mt, reaching a high of $9,279.5/mt and a low of $9,111/mt, closing at $9,253/mt (previous close: $9,190.2/mt, up 0.68%). The overall trend showed initial fluctuations followed by a significant rise. Open interest stood at 282,849 lots. Overnight, SHFE copper 2506 contract opened at 75,800 yuan/mt, reaching a high of 76,250 yuan/mt and a low of 75,550 yuan/mt, with the latest price at 76,070 yuan/mt (up 230 yuan/mt from the previous close, a 0.30% increase). The overall trend showed initial downward fluctuations followed by a significant rise. Trading volume was 46,735 lots, open interest was 159,208 lots, with a daily increase of -2,901 lots (a change of -1.79%). On the macro front, the European Central Bank cut interest rates by 25 basis points as expected, marking the seventh rate cut in the past year, with the decision unanimously approved, and the US dollar index stabilized. Trump expressed confidence in reaching a trade agreement with the EU but was in no rush to finalize it; if negotiations break down, it is reported that the EU is considering export restrictions on the US; the US Treasury Secretary also stated that negotiations with Japan are progressing very satisfactorily, and the advancement of trade agreements pushed up overnight copper prices. On the fundamental side, overall market activity was good, and due to the widening premiums in South China, the Shanghai-Guangdong price spread drove Shanghai spot copper premiums to remain firm, with tight low-priced supplies in the market. As of Thursday, April 17th, SMM's mainstream copper inventories across the country fell by 17,100 mt to 233,400 mt from Monday, down 33,800 mt from the previous Thursday, marking the seventh consecutive week of destocking, currently falling back from the year's high by 143,600 mt, and 170,100 mt lower than the 403,500 mt YoY. Overall, copper prices are expected to stabilize today as trade concerns ease.

Aluminum

Futures: Last night, the most-traded SHFE aluminum 2506 contract opened at 19,660 yuan/mt, with a high of 19,725 yuan/mt, a low of 19,505 yuan/mt, and closed at 19,645 yuan/mt, up 100 yuan/mt or 0.51% from the previous close. Yesterday, LME aluminum opened at $2,385/mt, with a high of $2,396/mt, a low of $2,363/mt, and closed at $2,385/mt, down $3.5/mt or 0.15%.

Summary: On the macro front, as the European Central Bank continued to cut interest rates, the US dollar index stabilized, finally closing at 99.44, up 0.18%. During the period, Trump announced "US tariffs on certain Chinese goods increased to 245%", and China stated that the US has weaponized tariffs to an irrational extent, and China will not respond. It can be seen that US tariff uncertainty remains, and global trade barriers are increasing, which may have a negative impact on China's export business in the short term. The domestic macro favorable atmosphere remains unchanged, promoting the recovery of domestic demand. On the fundamentals, domestic aluminum operating capacity remained stable, and the resumption of production capacity in Sichuan and Chongqing has been fully resumed and output has been achieved. The cost side of the aluminum industry rebounded slightly this week. As of Thursday, the domestic aluminum immediate full average cost was about 16,552 yuan/mt, down 18 yuan/mt WoW, mainly due to the continued decline in alumina prices, with aluminum costs slightly down 0.1%. On the demand side, domestic aluminum ingot social inventory destocking was significant, providing strong support for aluminum prices and spot premiums/discounts. According to SMM statistics, on April 17, domestic aluminum social inventory was 689,000 mt, down 35,000 mt WoW from Monday, stimulating downstream stocking sentiment after prices fell. Entering mid-to-late April, some aluminum processing sectors' subsequent orders showed a downward trend compared to the previous peak season, mainly due to the end of the PV installation rush, with some companies reporting that the operating rate may decline next week. Coupled with the impact of overseas tariff uncertainty, some sectors reported that overseas purchasing sentiment has re-emerged, and subsequent export orders may be affected. Overall, on the macro front, the escalation of the tariff war has led to bearish sentiment. On the fundamentals, domestic aluminum ingot inventory destocking provides support for aluminum futures and spot premiums. In the short term, the operating rate of the aluminum processing sector in April remains high, but subsequent orders are expected to decline, and domestic aluminum prices are expected to fluctuate.

Lead

Overnight, LME lead opened at $1,905.5/mt. As the impact of US tariffs was gradually digested by the market, LME lead showed a "V" trend throughout the day, with its center of operation shifting upward compared to the previous day and moving above $1,900/mt. Meanwhile, LME lead inventories reversed their trend and declined, and LME lead gradually strengthened during the night, eventually closing at $1,927.5/mt, up 1.23%.

Overnight, the most-traded SHFE lead 2505 contract opened at 16,750 yuan/mt. With a significant drop in SHFE lead warrant inventories, SHFE lead fluctuated upward, reaching a high of 16,805 yuan/mt during the session and eventually closing at 16,780 yuan/mt, up 0.36%. Its open interest stood at 27,495 lots, down 796 lots from the previous trading day.

At the beginning of the week, the SHFE lead 2504 contract completed delivery, and post-delivery cargoes re-entered the circulation market. Some downstream companies gradually started to pick up goods, leading to an expanded decline in lead ingot social inventories. Recently, lead prices have been in the doldrums, while scrap battery prices remain high, squeezing secondary lead smelting profits. Secondary lead companies are reluctant to sell at low prices, and in some regions, secondary refined lead prices are already higher than primary lead. Downstream just-in-time procurement leans toward primary lead, which also accelerates the consumption of social inventories by downstream companies. Additionally, due to losses, secondary lead companies' production enthusiasm is generally low, and some companies have already cut production. Coupled with the traditional consumption off-season factor, some downstream companies plan to cut production or take holidays this week. Lead ingot supply and demand are expected to decline, and lead prices will continue to fluctuate.

Zinc

Overnight, LME zinc opened at $2,598/mt. At the beginning of the session, after a brief consolidation, longs increased their positions, pushing the price to a high of $2,617/mt. Subsequently, bears intervened at higher levels, causing LME zinc to fluctuate downward and hit a low of $2,558/mt during European trading hours. Entering the night session, LME zinc returned to consolidate around the daily average line, eventually closing up at $2,595/mt, an increase of $17.5/mt or 0.69%. Trading volume decreased to 11,596 lots, while open interest decreased by 6,570 lots to 203,000 lots. Overnight, LME zinc recorded a four-day losing streak, with various moving averages forming resistance above. The US dollar rebounded slightly overnight, and with the Easter holiday starting today, funds mainly exited the market, leading LME zinc to maintain a fluctuating trend.

Overnight, the most-traded SHFE zinc 2506 contract opened at 21,950 yuan/mt. At the beginning of the session, longs increased their positions, quickly pushing the price to a high of 22,085 yuan/mt. However, bears increased their positions to suppress the price, causing SHFE zinc to fluctuate downward and hit a low of 21,870 yuan/mt before rebounding, recording a "V" reversal. It eventually closed up at 22,015 yuan/mt, an increase of 50 yuan/mt or 0.23%. Trading volume decreased to 84,317 lots, while open interest increased by 3,574 lots to 131,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the MACD bearish candlestick narrowing. Stimulated by the low zinc price, downstream companies increased their buying the dip, leading to a destocking of nearly 6,000 mt in social inventory, providing bottom support for the zinc price.

Tin

Confident in Reaching Trade Deal with EU but in No Rush to Finalize Agreement. US President Trump, during his meeting with Italian Prime Minister Meloni, stated that he expects to reach a trade agreement with the EU but is in no hurry to finalize a tariff deal. "There will be a trade agreement," Trump said on Thursday, "I absolutely believe it will be reached, but it will be a fair deal." Trump did not provide a specific timetable for when the first agreements with trading partners requesting tariff reductions would be reached. He only mentioned that the agreements would be reached "at some point," and that countries must make concessions. "We are in no rush at all," he added, "whether it's with Europe or other countries, reaching an agreement will not be difficult for us." Spot Market: Yesterday, the spot market gradually cooled down. Most traders reported that the transactions yesterday ranged from 10-30 mt, and the willingness of downstream and end-user customers to inquire about prices weakened. As prices rose, most companies began to adopt a wait-and-see approach.