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SMM Morning Comment For SHFE Base Metals On May 15

iconMay 15, 2024 10:18
LME copper prices opened at $10191.5/mt and closed at $10075/mt last evening, down 1.28% with the high-end of $10260/mt and the low-end of $10046/mt.

SHANGHAI, May 15 (SMM) –


LME copper prices opened at $10191.5/mt and closed at $10075/mt last evening, down 1.28% with the high-end of $10260/mt and the low-end of $10046/mt. Trading volume was 43,000 lots and open interest stood at 336,000 lots. The most active SHFE 2407 copper contract prices opened at 82300 yuan/mt and closed at 81350 yuan/mt last evening, down 0.96%, with the high-end of 82590 yuan/mt and the low-end of 81230 yuan/mt. Trading volumes stood at 65,000 lots and open interest stood at 196,000 lots. On the macro level, Federal Reserve Chairman Powell reiterated that interest rates may remain high for a longer period of time. He does not think that the next move may be a rate hike and is more likely to maintain the policy interest rate at the current level. In terms of fundamentals, from the supply side, domestic refineries have entered maintenance, and domestic copper supply has declined on a month-on-month basis. As delivery approaches, the amount of copper sent to warehouses has increased. In addition, due to the weakening import price ratio, there are differences in the acceptable prices between buyers and sellers, and only some of the goods slated to arrive soon at the port are sold at low prices. In terms of consumption, downstream processing companies are still mainly replenishing stocks on demand against high copper prices. On the fundamentals, as of Monday May 13, SMM copper inventory across major Chinese markets decreased 2,100 mt from last Thursday to 400,100 mt, up 259,000 mt YoY. In terms of price, we will pay attention to the upcoming US CPI data. It is expected that copper prices will have limited room for decline.


Overnight, the most-traded SHFE 2407 aluminum contract opened at 20,490 yuan/mt, with the highest and lowest prices at 20,525 yuan/mt and 20,420 yuan/mt before closing at 20,455 yuan/mt, down 180 yuan/mt or 0.87%. LME aluminum opened at $2,548/mt in the previous trading day, with its low and high at $2519/mt and $2,559/mt respectively before closing at $2,549/mt, up 0.28%.

Summary: On the macro front, the MoM growth rate of US PPI exceeded expectations, and the market reduced its bets on the Fed's September rate cut, and the probability of a rate cut weakened again; the domestic Ministry of Finance issued ultra-long special treasury bonds, and market funds are expected to be introduced into real enterprises to support the real economy. From a fundamental perspective, LME aluminum inventories surged again by 130,000 mt, putting pressure on aluminum prices. Domestic inventories of aluminum ingots and billets continued to drop after the holiday, but the inventory of aluminum ingots only decreased by 10,000 mt YoY. Domestic supply and demand contradictions may gradually emerge. Combined with domestic and overseas macro sentiment, aluminum prices are expected to move rangbound supported by the resilience of domestic downstream consumption. However, as overseas aluminum inventories were under pressure again, we need to pay attention to adjustment risk.


LME lead opened at $2255/mt overnight and closed at $2266.5/mt, a drop of 0.04%.

The most active SHFE 2407 lead contract prices opened at 18300 yuan/mt last evening and closed at 18505 yuan/mt, an increase of 1.04%, with the high-end of 18615 yuan/mt.


LME zinc opened at $3004/mt yesterday evening, and hit a high of $3011.5/mt and a low of $2962/mt, and closed at $2988.5/mt, a decrease of $9/mt or 0.3%. Trading volume decreased to 10588 lots, and open interest grew 1066 lots to 241,000 lots. LME zinc inventory fell by 450 tons to 250,950 tons, a decrease of 0.17%. LME zinc maintained high-level fluctuations amid favourable macro environment. However, the US PPI data rose beyond expectations, coupled with Powell's hawkish remarks, the market reduced its bets on US interest rate cuts.

The most-traded SHFE 2407 zinc contract opened at 23710 yuan/mt overnight, and touched a low of 23545 yuan/mt before finishing at 23725 yuan/mt, down 50 yuan/mt or 0.21%. Trading volume was down to 64390 lots, and open interest gained by 1715 lots to 103,000 lots. Thanks to domestic infrastructure expectations, SHFE zinc may maintain high-level fluctuations in the future.


Overnight, SHFE 2406 tin contract stayed at highs, closing at 273,160 yuan/mt, up 1.18%.

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 500-1,500 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 200-500 yuan/mt for Yunxi brand. In yesterday's early trading, tin prices stayed at highs, inhibiting downstream companies buying sentiment. Few deals were heard among traders. Transactions were poor yesterday.


On May 14, the most-traded SHFE nickel contract opened at 143,880 yuan/mt, and closed at 144,460 yuan/mt, up 950 yuan/mt compared with the last trading day. Trading volume fell by 7,880 lots to 199,212 lots, and open interest increased by 56 lots to 80,017 lots. The most-traded SHFE nickel contract continued to decline after the opening. Despite a slight increase, it was still in a downward trend to the lowest at 142,700 yuan/mt and then rose rapidly, with a final increase of 0.64%.

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