SMM Morning Comment For SHFE Base Metals On Mar 22

SHANGHAI, Mar 22(SMM) –

Copper

LME copper prices opened at $9008/mt and closed with a drop of 0.29% at $8963.5/mt last evening the low-end of $8918.5/mt and the high-end of $9022/mt. Trading volume stood at 27,000 lots. Open interest stood at 314,000 lots. The most active SHFE 2405 copper contract prices opened at 72920 yuan/mt and closed at 72560 yuan/mt last evening, down 0.43%, with the high-end of 73060 yuan/mt and the low-end of 72360 yuan/mt. Trading volumes stood at 64,000 lots and open interest stood at 211,000 lots. The Swiss National Bank unexpectedly boosted the US dollar. In addition, the number of people filing for unemployment benefits in the United States in the week to March 16 was 210,000, lower than the expected 215,000. This also boosted the US dollar and was negative for copper prices. In terms of fundamentals, from the supply side, warehouse receipts will be offerred for sale at the end of the week, and imported copper will arrive. It is expected that the demand for copper will increase significantly. From a consumption perspective, rising copper prices have continued to suppress downstream procurement demand. Only a small number of companies just need to purchase. As of March 21, SMM copper inventory across major Chinese markets stood at 395,000 mt, down 400 mt from Monday and 195,000 mt higher than the same period last year. Due to the influence of macro sentiment, copper prices will move at highs in the near future.

Aluminum

Overnight, the most-traded SHFE 2405 aluminum contract opened at 19,510 yuan/mt, with high and low at 19,530 yuan/mt and 19,365 yuan/mt before closing at 19,405 yuan/mt, down 80 yuan/mt or 0.41%. LME aluminum opened at $2,290/mt in the previous trading day, with its high and low at $2,313.5/mt and $2,285.5/mt respectively before closing at $2,309/mt, up $25.5/mt or 1.12%.

On the macro level, State Council released favourable policies to boost demand. Fed maintained interest rates unchanged in March, which was in line with expectations. Swiss Central Bank cut interest rates, causing LME aluminum to rise sharply overnight. Fundamentally, imports of primary aluminum are still at a high level, and the drought in Yunnan will not disturb aluminum production resumption in the short term. The arrivals of peak season boosted downstream operating rates. Aluminum ingot inventory is likely to peak, supporting aluminum prices.

Lead

Overnight, LME lead prices opened at US$2,072/ton and fluctuated around the day's high of US$2,080/ton. Entering the European session, the U.S. dollar rebounded, and the increase in lead stocks did not change. LME lead prices dropped, with the lowest level reaching 2048.5 US dollars / ton, and finally closed at 2057 US dollars / ton in late trading, a decrease of 0.63%.

The most active SHFE 2405 lead contract prices opened at 16260 yuan/mt with the low-end of 16165 yuan/mt, and finally closed at 16180 yuan/mt, down 0.19%. Open interest increased 600 lots to 54366 lots.

Zinc

LME zinc opened at $2518/mt last evening, and hit a high of $2571.5/mt before falling back to a low of $2525/mt, and closed at $2532/mt, up $9/mt or 0.36%. Trading volume was 10102 lots, and open interest increased by 2470 lots to 223,000 lots. LME zinc inventories increased by 2400 Lot 272925 mt, an increase of 0.89%. Affected by the earlier interest rate cut in Europe overnight, the US dollar strengthened and non-ferrous metals pulled back. However, production reductions in overseas mines still support zinc prices.

The most active SHFE 2405 prices opened at 21480 yuan/mt and lost 5 yuan/mt or 0.02% to settle at 21320 yuan/mt in overnight trading with the low-end of 21275 yuan/mt. Trading volumes decreased to 56146 lots and open interest fell 2183 lots to 106,000 lots. Overnight macro sentiment affected the zinc in Shanghai, but the shortage on the supply side and declines in SMM social inventory limited zinc price declines.

Tin

SHFE 2404 tin contract rose to 229,730 yuan/mt and closed at 227,790 yuan/mt, up 1.08%.

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 1000-1,200 yuan/mt over SHFE 2404 tin contract, versus discounts of 700 yuan/mt to premiums of 400 yuan/mt for delivery brands, premiums of 200-500 yuan/mt for Yunxi brand, and discounts of 1200-1,400 yuan/mt for imported brand tin ingots. Tin prices rose sharply yesterday, suppressing downstream and terminal companies from purchasing. Few deals were heard among traders.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 136,360 yuan/mt, and closed at 137,980 yuan/mt, down 1,420 yuan/mt. Trading volume fell by 11,347 lots, and open interest decreased by 1,885 lots. From a macro perspective, the Fed announced yesterday evening that the March interest rate range will remain unchanged. 10 Fed officials expected the interest rate to fall by at least 75 basis points by the end of this year. However, Powell said that the possibility of a rate cut in May is still small. Fundamentally, the progress of nickel ore approval accelerated. The market's expectations for tight supply of raw materials began to weaken, so the prices fell sharply in the afternoon. In addition, according to SMM research, the tight output of intermediate products is expected to ease in April. Nickel price is expected to go down.