Risk Control Comes First: Reduce Positions in Non-Ferrous Metals Before the Holiday [[Institution Commentary]]

[Copper]

On Tuesday, SHFE copper fluctuated above the MA250 daily moving average. Today, spot copper returned to 78,035 yuan, with Shanghai copper premiums expanding to 205 yuan and Guangdong premiums at 210 yuan. Pre-holiday stockpiling was relatively active. An overnight widespread power outage in the Iberian Peninsula heightened market concerns about European power grid security, with no confirmed cause yet identified. Some speculate it may be related to the large-scale integration of renewable energy into the grid. Additionally, the ICSG adjusted the 2025 refined copper balance sheet, reducing the expected increase in copper concentrate production from October last year, maintaining the view of a supply surplus for the year. The market is mainly concerned about consumption performance after mid-May, and with a 90-day exemption from reciprocal tariffs for ASEAN, there are significant concerns about demand in H2. Hold short positions above 78,000 for the 2507 contract.

[Aluminum and Alumina]

Today, SHFE aluminum fluctuated rangebound. Spot aluminum in east China was on par with futures, while discounts in south China widened by 15 yuan to 75 yuan. Over the past week, social inventories of aluminum ingots and aluminum billets continued to decline rapidly, dropping by 30,000 mt and 34,000 mt respectively, with total inventories at their lowest level for the same period in recent years. Short-term macroeconomic pessimism has eased, and strong fundamentals have supported aluminum prices returning to around 20,000 yuan. However, further expansion of industry profits exceeding 3,000 yuan requires stronger expectations of a supply deficit. Amid the shadow of a trade war, demand prospects during the off-season are difficult to be optimistic about. It is expected that SHFE aluminum will face strong resistance in the previous deficit range of 20,000-20,300 yuan. Recently, alumina maintenance has increased, leading to a temporary reduction in production and a decline in industry inventories. However, once ore prices continue to fall or alumina prices rebound continuously, capacity will still resume on a large scale. The long-term surplus outlook and high warrant inventory limit the height of price rebounds. Today, the futures market fell significantly, trading at a discount to spot prices. There may still be support near the previous lows, and it is not advisable to chase short positions. Overall, under a fluctuating trend, the strategy is to sell on rallies.

[Zinc]

As the May Day holiday approaches, macroeconomic uncertainties are high, and funds are relatively cautious, with SHFE zinc fluctuating rangebound. Downstream stockpiling at lower levels was relatively sufficient, with low acceptance of high zinc prices. On Monday, SMM zinc social inventories halted their decline, recording 85,900 mt. SMM May domestic and imported TC for ZN50 increased by 50 yuan and $5 MoM to 3,500 yuan/mt (metal content) and $45/dmt respectively. With zinc prices running low, mines continue to make minor concessions, indirectly confirming weak end-use consumption. The "Golden March, Silver April" period is coming to an end, with high-frequency data showing weakening demand. Affected by cumulative tariffs, downstream orders to the US face the risk of being returned or canceled. May consumption expectations are under pressure, and SHFE zinc continues the strategy of selling on rallies.

[Lead]

Secondary lead smelters have reduced production beyond expectations, with a price difference of 25 yuan/mt between primary lead and scrap. In some regions, the price of primary lead is lower than that of scrap, leading downstream buyers to prefer primary lead. SMM lead social inventories decreased by 10,100 mt MoM to 44,500 mt. Due to expanding losses, secondary lead smelters intend to drive down raw material purchasing prices. At the end of last week, scrap battery suppliers, fearing price declines, sold off their holdings, improving raw material arrivals at some smelters. Battery end-use demand remains weak, with battery companies generally taking 2-3 days more off during the May Day holiday compared to the same period last year. With both supply and demand weak, SHFE lead is expected to fluctuate rangebound between 16,300-17,000 yuan/mt. Continuously monitor smelter dynamics and the SHFE/LME price ratio.

[Nickel and Stainless Steel]

SHFE nickel corrected, with market trading activity remaining mediocre. The anticipated pre-holiday stockpiling demand did not materialize as expected, with downstream buyers adopting a cautious wait-and-see attitude, resulting in an overall sluggish trading atmosphere. Jinchuan premiums fell to 2,250 yuan, imported nickel premiums were at 150 yuan, and electrodeposited nickel premiums were at 100 yuan. High-grade nickel pig iron was quoted at 971 yuan per mtu, having fallen nearly 5% over the past month. In terms of inventories, nickel pig iron inventories increased by 3,700 mt to 24,000 mt, refined nickel inventories rose by 700 mt to 44,700 mt, and stainless steel inventories decreased by 14,000 mt to 986,000 mt. SHFE nickel is at the tail end of another rebound, with bears observing new opportunities to build positions.

[Tin]

SHFE tin fluctuated with a positive daily candlestick, with the trading center remaining above 260,000 yuan. Today, spot tin was at 262,200 yuan, with a real-time premium of 370 yuan against the delivery month futures price. SHFE tin saw a reduction in open interest and low participation. In the next two months, Wa State will advance production resumptions, and Alphamin in the Congo will resume production. Despite tight domestic tin ore resources, market attention is increasingly focused on demand. SHFE tin is expected to sell on rallies, with short positions held against the 265,000-270,000 yuan range.

(Source: SDIC Futures)