SMM Morning Comment For SHFE Base Metals On Mar 14

SHANGHAI, Mar 14(SMM) –

Copper

LME copper prices opened at $8670.5/mt and closed at $8920/mt last evening, up 3.14%, with the highest of $8950/mt and the lowest of $8638.5/mt.Trading volume was 48,000 lots, and open interest stood at 289,000 lots. The most active SHFE 2405 copper contract prices opened at 71200 yuan/mt and finished at 71950 yuan/mt overnight, with the high-end of 72200 yuan/mt and the low-end of 71080 yuan/mt, up 2.74%. Trading volume was 105,000 lots, and open interest stood at 205,000 lots. On the macro front, as the recent TCs dropped to an ultra-low level in 10 years, the China Nonferrous Metals Association yesterday convened a meeting of domestic mainstream refineries to discuss countermeasures. Sources revealed that smelters may have plans to reduce production. Therefore, copper prices were significantly boosted to the highest level in 11 months. In addition, the State Council issued the "Action Plan for Promoting Large-Scale Equipment Updates and Trade-in of Consumer Goods" to promote consumption, stimulate investment and increase advanced production capacity. That supported copper prices. In terms of fundamentals, from the supply side, arrivals have decreased, warehouse receipts held by sellers have increased, and spot supply has been compressed to a certain extent. In terms of consumption, copper prices surged, and downstream purchases were on demand. The seasonal recovery pace is slow. Overall, inventories have declined, but supply remains loose. Taken together, the news of domestic refinery production cuts has significantly boosted copper prices. It is expected that copper prices will have support.

Aluminum

The most-traded SHFE 2404 aluminum contract opened at 19,270 yuan/mt overnight, with its low and high at 19,225 yuan/mt and 19,290 yuan/mt before closing at 19,255 yuan/mt, up 20 yuan/mt or 0.10%. LME aluminum opened at $2,261/mt on Wednesday, with its high and low at $2,274.5/mt and $2,254/mt respectively before closing at $2,262.5/mt, down $0.5/mt or 0.02%.

On the macro level, State Council released favourable policies to boost demand. Attitude towards cutting interest rates swung in Europe and the US, which coupled with the US presidential election, bringing uncertainty to aluminum prices. In the short term, the import window for aluminium ingots closed, and inventory is likely to peak, supporting aluminum prices. We need to pay close attention to recovery in consumption during the peak season and the fluctuation of expectations for overseas interest rate cuts.

Lead

LME lead opened at $2142/mt overnight and rose by 0.93% to close at $2166/mt with the highest point at $2172/mt and the lowest point at $2137.5/mt.

Overnight, the most active SHFE 2404 lead contract opened at 16360 yuan/ton, finally closing at 16330 yuan/ton, a decrease of 0.06%.

Zinc

Overnight, LME zinc opened at $2557/mt, hitting a low and high of $2547/mt and $2583/mt respectively, and closed at $2571.5/mt, up $21.5/mt or 0.84%. Trading volume decreased to 10262 lots, and open interest grew 776 lots to 234,000 lots. LME zinc inventories decreased by 2100 mt to 267750 mt, a decrease of 0.78%.

The most active SHFE 2405 zinc contract prices opened at 21430 yuan/mt and gained 165 yuan/mt or 0.77% to settle at 21500 yuan/mt, with the high-end of 21500 yuan/mt. Trading volumes decreased to 35201 lots and open interest fell 6075 lots to 86326 lots. Downstream buyers stood on the sidelines and trading was quiet.

Tin

SHFE 2404 tin contract continued to rise to 224,900 yuan/mt before closing at 223,000 yuan/mt overnight, up 1.6%.

Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as below. Small brand tin ingots were offered at discounts of 400-1,100 yuan/mt against SHFE 2404 tin contract, versus discounts of 600 yuan/mt to premiums of 300 yuan/mt for delivery brands, premiums of 200-700 yuan/mt for Yunxi brand, and discounts of 1,100-1,300 yuan/mt for imported brand tin ingots. Tin prices rose slightly in early trading yesterday, and some downstream companies planned to purchase a small amount of tin ingots.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 140,800 yuan/mt, and closed at 142,050 yuan/mt, up 1,760 yuan/mt. Trading volume rose 48,872 lots, and open interest increased 4,982 lots. From a macro perspective, the US non-agricultural employment population increased by 275,000 in February after seasonally adjustment, which was the lowest since November 2023. The US unemployment rate rose to 3.9% in February, the highest level since January 2022. Fed is likely to cut interest rate by 25 basis points in June. From a fundamental perspective, yesterday’s spot market transactions were weak. Given the nickel prices, downstream manufacturers still focused on destocking. The downstream orders did not improve. Nickel prices are vulnerable to decline.