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SMM Morning Comment For SHFE Base Metals On Apr 12

iconApr 12, 2024 10:17
LME copper prices opened at $9371.5/mt and closed 0.39% lower at $9361/mt overnight, with the low-end of $9312.5/mt and the high-end of $9416/mt.

SHANGHAI, Apr 12 (SMM) –


LME copper prices opened at $9371.5/mt and closed 0.39% lower at $9361/mt overnight, with the low-end of $9312.5/mt and the high-end of $9416/mt. The trading volume was 20,000 lots, and open interest stood at 327,000 lots. The most active SHFE 2102 contract prices opened at 76280 yuan/mt and closed at 76080 yuan/mt last evening, down 0.20%, with the high-end of 76410 yuan/mt and the low-end of 75830 yuan/mt. Trading volumes stood at 53,000 lots and open interest stood at 199,000 lots. On the macro level, the annual PPI rate in the United States was 2.1% in March. After the data was released, the possibility of the Federal Reserve cutting interest rates in July increased slightly, and the US dollar index was under certain pressure. But then the ECB kept interest rates unchanged, hinting at an imminent rate cut, and the U.S. dollar subsequently rose again, remaining at a high level, suppressing copper prices. In terms of fundamentals, from the supply side, the supply remains sufficient, and after delivery next week, it is expected that a certain amount of warehouse receipts will be offered for sale. In terms of consumption, the price spread between front-month and next-month contracts is relatively large as delivery approaches, resulting in a slight rebound in premiums and discounts. Actual transactions have not seen a significant recovery, and downstream purchasing was still relatively poor. On Fundamentals, as of Thursday April 11, SMM copper inventories across major Chinese markets stood at 405,200 mt, up 3,700 mt from Monday and 17,200 mt from a week earlier, 215,100 mt higher than the same period last year. Overall, the US dollar remains strong, but according to foreign media reports on the 11th, satellite monitoring data showed that the operation of global copper smelters in March declined compared with the previous two months, and idle production capacity increased. This will bolster copper prices today.


Overnight, the most-traded SHFE 2406 aluminum contract opened at 20,425 yuan/mt, with the highest and lowest prices at 20,510 yuan/mt and 20,380 yuan/mt before closing at 20,460 yuan/mt, flat from the previous trading day. LME aluminum opened at $2,463/mt in the previous trading day, with its high and low at $2,482/mt and $2,443/mt respectively before closing at $2,457/mt, down $14/mt or 0.57%.

Summary: On the macro level, the recent strong employment data and high inflation data further delayed the Fed's interest rate cut expectations, and favourable policies such as "trade in" in China have been introduced. Fundamentally, the domestic aluminum operating capacity was recovering slowly. On the demand, high aluminum price suppressed downstream purchasing enthusiasm and operating rate. The spot discounts sustained, but driven by the destocking of aluminum ingots, the discounts may narrow. Overall, the aluminum prices stayed at highs due to growing expectations of US economic recovery and positive fundamentals, and may swing on a strong note. We need to pay attention to impact of high prices on downstream procurement and changes in domestic inventory.


Overnight, LME lead prices opened at $2162.5/mt overnight. The contract finally closed at $2141/mt, a decrease of 0.76%.

Overnight, the most active SHFE 2406 lead contract opened at 16690 yuan/mt. Due to the growth in lead warrants inventory, SHFE lead dropped to a low of 16615 yuan/mt. The contract closed at 16645 yuan/mt, a decrease of 0.48%. Open interest stood at 62791 lots, an increase of 1996 lots from the previous trading day.


Overnight, LME zinc opened at US$2,750.5/ton. After a brief decline at the beginning of the session, it quickly rose, reaching a high of US$2,788/ton, finally closing at US$2,767/ton, an increase of US$16/ton, or 0.58%. The trading volume decreased to 16,082 lots, and open interest increased by 1,990 lots to 250,000 lots. LME zinc inventory has not changed. As US PPI data has boosted expectations for rate cuts, LME zinc may have further upside room.

The most active SHFE 2406 zinc contract fell to a low of 22540 yuan/mt after opening at 22800 yuan/mt, and finally closed at 22715 yuan/mt, down 155 yuan/mt or 0.68%. Trading volume was down to 130,000 lots, and open interest grew by 1962 lots to 125,000 lots. Affected by the expected improvement in future downstream demand, the macro sentiment was relatively positive. However, zinc prices were too high and downstream purchases were poor, and inventories increased again, suppressing the upward momentum of SHFE zinc.


Overnight, SHFE 2405 tin contract fell sharply, closing at 244,280 yuan/mt, down 1.47%.

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 800-2,000 yuan/mt for SHFE 2405 tin contract, versus discounts of 0-800 yuan/mt for delivery brands and premiums of 200-300 yuan/mt for Yunxi brand. Tin prices remained at a high level, but due to the low inventory, some downstream enterprises restocked only as needed. Few deals were heard among traders.


On Thursday, the most-traded SHFE nickel contract opened at 141,970 yuan/mt, and closed at 139,610 yuan/mt, down 70 yuan/mt compared with the last trading day. Trading volume increased by 13,042 lots to 273,596 lots, and open interest decreased by 6,391 lots to 75,201 lots. The most-traded SHFE nickel contract fluctuated greatly after opening. In the afternoon, it experienced a sharp drop to the lowest at 138,700 yuan/mt and then rapidly rebounded, with the final increase of 0.26%.

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