SMM Morning Comment For SHFE Base Metals On Apr 1

SHANGHAI, Apr 1 (SMM) –

Copper

LME was closed last Friday due to the Good Friday holiday. The most active SHFE 2405 copper contract prices opened at 72600 yuan/mt and finished at 72610 yuan/mt last Friday evening, up 0.39%, with the low-end of 72510 yuan/mt and the high-end of 72970 yuan/mt. Trading volume was 29,000 lots, and open interest stood at 175,000 lots. On the macro level, the CSPT meetings in the first quarter continued to call for production cuts, which is bullish for copper prices, but there are no detailed plans and data, so we need to pay attention to the actual impact on the market in the future. In addition, the US core PCE cooled down in line with market expectations, which helped the market strengthen its expectations of a US interest rate cut in June. In terms of fundamentals, the supply side is improving, warehouse receipts have increased, and spot goods available decreased. The overall supply is not tight. In terms of consumption, demand is expected to improve before the Qingming Festival if copper prices do not rise. In terms of price, copper prices continue to run at high levels. We need to pay attention to whether the PMI data released this week will cause copper price shocks.

Aluminum

The most-traded SHFE 2405 aluminum contract opened at 19,710 yuan/mt last Friday night, with its lowest and highest at 19,645 yuan/mt and 19,820 yuan/mt before closing at 19,665 yuan/mt, up 45 yuan/mt or 0.23%.

From a macro perspective, overseas interest rate cuts delayed again. The US February PCE data was basically in line with expectations, the Fed made hawkish remarks again, and non-ferrous metals were under pressure. The domestic manufacturing PMI in March returned to the expansion territory, and the domestic economy rebounded. Fundamentally, the recovery of downstream consumption is in line with expectations. The comprehensive PMI index of the aluminum processing industry in March was in expansion territory. Aluminum ingot inventories declined slightly last week. The operating rate of downstream enterprises improved and were expected to grow in April. Stable market demand provided support for aluminum prices.

Lead

The London Metal Exchange was closed last Friday for the Good Friday holiday.

The most traded SHFE 2310 lead contract opened at 16740 yuan/mt and fell 0.45% to 16655 yuan/mt, after briefly hitting a high point at 16780 yuan/mt and the lowest point at 16580 yuan/mt.

Zinc

Last Friday, Federal Reserve Chairman Powell: There is no need to rush to cut interest rates, and the possibility of economic recession is not high at present; Russian Deputy Prime Minister: Russia has decided to further reduce oil production in the second quarter; US media: The United States may ban Venezuela from trading oil Settled in US dollars; Japan's Ministry of Finance: Japan's currency intervention amount was 0 yen from February 28 to March 27; Turkish President Erdogan suffered a disastrous defeat in the local election; China's manufacturing PMI returned to expansion in March range, non-manufacturing PMI expansion continues to accelerate; many places have introduced policies to promote the real estate market.

Last Friday, LME was closed for the Easter holiday.

Last Friday, the SHFE 2405 zinc contract opened at 20900 yuan/ton with a low of 20835 yuan/ton and a high of to 20935 yuan/ton. It finally closed down at 20920 yuan/ton, down 25 yuan/ton, or 0.12%. The trading volume dropped to 27212 lots, and the open interest decreased by 43 lots to 92569 lots. The slight decline in domestic inventories and tight ore supply supported zinc prices. However, the recovery of consumption was not as good as expected.

Tin

SHFE 2405 tin prices continued to decline last Friday night, closing at 224,810 yuan/mt, down 0.59%.

Last Friday, 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 800-1,100 yuan/mt for SHFE 2405 tin contract, versus discounts of 0-800 yuan/mt for delivery brands, premiums of 0-100 yuan/mt for Yunxi brand, and discounts of 1,000 yuan/mt for imported brand tin ingots. Tin prices rose sharply last Friday, leaving downstream companies on the sidelines. Few deals were heard among traders.

Nickel

Nickel prices are affected by cost-related news, fluctuating around 130,000 yuan/mt. Before last Thursday's U.S. stock market opening, the latest report from the U.S. Bureau of Economic Analysis increased the GDP growth rate for the fourth quarter of 2023 and lowered key inflation indicators. However, Federal Reserve Board Governor Waller, on last Wednesday, suggested no urgency for rate cuts, signaling a potential delay in rate cuts. U.S. dollar index futures rose. Fundamentally, the pure nickel spot market stayed strong. Downstream buyers utilized their stockpiled materials because of high nickel prices. SMM predicted these inventories would be depleted by late March. With nickel prices dropping, buyers are eager, and this trend is likely to continue until early April. Supply side, overseas nickel plate long-term orders arrived for the first time this year, and local nickel plants are ramping up production. However, the price gap between nickel sulphate and nickel briquettes widened, reaching around 10,000 yuan/mt. This has made producing nickel sulphate profitable by dissolving nickel briquettes with sulfuric acid. With a shortage of intermediate products like MHP, some nickel sulphate plants started buying nickel briquettes. Due to limited domestic nickel briquettes stock and the ongoing closure of pure nickel import window, it's hard for overseas nickel briquettes to enter the domestic market. Currently, the domestic supply and demand for nickel briquettes are extremely tight. However, as overseas intermediate products arrive, the demand for nickel briquettes will decrease.