SMM Morning Comment For SHFE Base Metals On May 9

SHANGHAI, May 9 (SMM) –

Copper

LME copper prices opened at $9881.5/mt and closed at $9902/mt overnight, a rise of 1.07%, with the low-end of $9852.5/mt the beginning high-end of $9913/mt. The trading volume was 21,000 lots, and open interest stood at 334,000 lots. The most active SHFE 2406 copper contract prices opened at 79470 yuan/mt and closed at 79720 yuan/mt last evening, up 0.56%, with the high-end of 79900 yuan/mt and the low-end of 79420 yuan/mt. Trading volumes stood at 38,000 lots and open interest stood at 177,000 lots. On the macro front, the dollar remained firm and rose, suppressing copper prices from falling overnight. Boston Fed President Collins said the economy needs to cool to achieve the 2% inflation target, and keeping interest rates stable for a longer period of time will slow economic growth. In addition, Egyptian sources said that the parties to the Gaza ceasefire negotiations reached significant consensus on some controversial issues. In terms of fundamentals, from the supply side, the inflow of imported copper is slow and the warehouse receipts are increasing. In terms of consumption, after the copper price fell, the enthusiasm of downstream to replenish stocks has increased. If the downward trend can be sustained, consumption may further improve. Overall, the strong US dollar has exerted some pressure on copper prices, but domestic demand expectations and supply concerns still provide bottom support for copper prices.

Aluminum

Overnight, the most-traded SHFE 2406 aluminum contract opened at 20,405 yuan/mt, with the highest and lowest prices at 20,590 yuan/mt and 20,370 yuan/mt before closing at 20,585 yuan/mt, up 170 yuan/mt or 0.83%. LME aluminum opened at $2,547.5/mt in the previous trading day, with its low and high at $2541/mt and $2,550.5/mt respectively before closing at $2,549.5/mt, up 0.18%.

Summary: The domestic macro front was intertwined with bullish and bearish factors. Supporting real estate and stimulating consumption still dominated the market. The inventory growth after the holiday was better than expected. The inventory of aluminum ingots and billets in major consumption areas dropped slightly, but high aluminum prices suppressed downstream consumption. 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 opened at $2242/mt and rose during the Asian trading hours yesterday, rising to $2242/mt before falling to a low of $2212/mt. It finally dropped and closed at $2232/mt, down $11.5/mt or 0.51%.

The most active SHFE 2406 lead contract prices opened at 17800 yuan/mt and touched a high of 18080 yuan/mt before closing at 17995 yuan/mt, up 100 yuan/mt or 0.56%.

Zinc

Overnight, LME zinc opened at $2947/mt before moving down to a low of $2856/mt. It eventually closed down $33/mt or 1.12% at $2910/mt. The trading volume rose to 13047 lots, to reduce interest decreased by 3216 lots to 240,000 lots. LME zinc inventory dropped by 975 mt or 0.38% to 252750 mt. The macro sentiment is bearish. Affected by the strengthening of the US dollar, non-ferrous metals generally fell. It is expected that LME zinc will fluctuate weakly today.

The most-traded SHFE 2406 zinc contract opened at 23000 yuan/mt overnight and fell to 22915 yuan/mt before rallying to a peak of 23215 yuan/mt. It eventually closed at 23,175 yuan/mt, up 55 yuan/mt or 0.24%. Trading volume reduced to 75383 lots, and open interest decreased by 1640 lots to 85330 lots. SHFE zinc is expected to run weakly.

Tin

Overnight, SHFE 2406 tin contract rose slightly and then fell back, closing at 259,010 yuan/mt, down 0.7%.

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 700-1,000 yuan/mt for SHFE 2406 tin contract, versus discounts of 600 yuan/mt to premium of 300 yuan/mt for delivery brands and premiums of 100-500 yuan/mt for Yunxi brand. In the early trading yesterday, SHFE 2405 tin contract fell sharply, and most downstream enterprises placed orders at low prices. The trades in market were robust yesterday.

Nickel

On May 8, the most-traded SHFE nickel contract opened at 143,580 yuan/mt, and closed at 141,190 yuan/mt, down 2,980 yuan/mt compared with the last trading day. Trading volume increased by 7 lots to 221,666 lots, and open interest decreased by 153 lots to 98,025 lots. The most-traded SHFE nickel contract fell rapidly after opening, and then fluctuated at a relatively stable range, with the lowest at 140,650 yuan/ton and a final decrease of 2.84%.