SMM Morning Comment For SHFE Base Metals On May 7

Published: May 7, 2024 10:12

Source: SMM

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The LME was closed. Overnight, SHFE copper prices opened at 81,300 yuan/mt, with its session high and low at 81,680 yuan/mt and 81,120 yuan/mt before closing at 81,270 yuan/mt, up 0.46%.

SHANGHAI, May 7 (SMM) –

Copper

The LME was closed. Overnight, SHFE copper prices opened at 81,300 yuan/mt, with its session high and low at 81,680 yuan/mt and 81,120 yuan/mt before closing at 81,270 yuan/mt, up 0.46%. Trading volume was 33,000 lots and open interest stood at 188,000 lots. Copper prices remained strong due to expectations of a rate cut by the Federal Reserve and support from the geopolitical situation. According to foreign media on May 6, First Quantum said on Monday that it was seeking dialogue with the new Panamanian government on the differences over the Cobre Panama copper mine to jointly find a solution. Last Sunday, Jose Raul Mulino was elected as the new president of Panama. Fundamentally, copper prices were still at a high level, suppressing downstream consumption. Therefore, companies adopted a wait-and-see stance and consumption did not see a significant recovery. In addition, as many copper rod factories stopped production during the Labour Day holiday, smelters sent more goods to warehouses. As of May 6, SMM copper inventory in China's major regions increased by 16,800 mt WoW to 404,700 mt. During the Labour Day holiday, copper inventories in China’s all regions rose. Looking ahead, with approaching delivery and large spot discount, it is expected that smelters will continue to expand the quantity sent to warehouses. At the same time, imported copper is also arriving in succession. However, due to the recent export plans of smelters, domestic supply will be reduced. Therefore, inventory growth is expected to be limited this week. If there is new progress in resolving the disputes over First Quantum's Cobre copper mine, copper prices are expected to fall back.

Aluminum

Overnight, the most-traded SHFE 2406 aluminum contract opened at 20,720 yuan/mt, with the highest and lowest prices at 20,830 yuan/mt and 20,705 yuan/mt before closing at 20730 yuan/mt, down 15 yuan/mt or 0.07%. LME aluminum closed on the previous trading day.

Summary: The domestic macro front was intertwined with bullish and bearish factors. Fundamentally, the bauxite supply was tight, and ore prices were solid. The alumina prices rose rapidly, pushing up aluminium cost. On the demand, the inventory growth after the holiday was better than expected, but high aluminum price suppressed downstream consumption, and the inventory of aluminum ingots and aluminum billets declined at a slower pace. In the short term, supply-demand imbalance is not prominent. Low inventory and bullish demand can support aluminum price. It is expected that the aluminum prices may go up.

Lead

LME lead closed on May 6 due to bank holiday in London. The most-traded SHFE 2406 lead contract opened at 17,755 yuan/mt overnight, and hit a high of 17,790 yuan/mt, but then fell to 17,560 yuan/mt before closing at 17,635 yuan/mt, up 120 yuan/mt or 0.69%.

Zinc

Overnight, the LME was closed due to the Bank Holiday.

Overnight, the most-traded SHFE zinc 2406 contract fell to 23,235 yuan/mt after opening at 23,280 yuan/mt, but then rose to 23,460 yuan/mt before closing at 23,385 yuan/mt, up 80 yuan/mt or 0.43%. Trading volume decreased to 57,820 lots, and open interest increased by 3,132 lots to 95,337 lots. SHFE zinc prices rose overnight, boosted by macro sentiments. Fundamentally, although there was news of production resumption at the mining end, the short-term supply shortage still supported the zinc prices. As downstream consumption is unlikely to pick up, providing weakening support for zinc prices, it is expected that SHFE zinc prices will fluctuate widely.

Tin

SHFE 2406 tin contract rose sharply, closing at 264,440 yuan/mt, up 1.85%.

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 1,000 yuan/mt for SHFE 2406 tin contract, versus discounts of 800 yuan/mt to premiums of 300 yuan/mt for delivery brands and premiums of 0-300 yuan/mt for Yunxi brand. Tin prices moved rangebound yesterday. The purchasing willingness of downstream enterprises were moderate. Transactions were active yesterday.

Nickel

On Monday, the most-traded SHFE nickel contract opened at 145,000 yuan/mt, and closed at 142,850 yuan/mt, down 3,020 yuan/mt compared with the last trading day. Trading volume rose 21,522 lots to 291,042 lots, and open interest increased 1,132 lots to 100,654 lots. The most-traded SHFE nickel contract was relatively stable, fluctuating within a certain range, with the final decrease of 0.4%.

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