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SMM Morning Comment For SHFE Base Metals On May 16

iconMay 16, 2024 10:14
LME copper prices opened at $10321/mt and closed at $10282/mt in last evening trading, a gain of 2.05%, with the low-end of $10124/mt and the high-end of $10335/mt.

SHANGHAI, May 16 (SMM) –


LME copper prices opened at $10321/mt and closed at $10282/mt in last evening trading, a gain of 2.05%, with the low-end of $10124/mt and the high-end of $10335/mt. Trading volume was 44,000 lots, and open interest stood at 337,000 lots. The most active SHFE 2407 copper contract prices opened at 82370 yuan/mt and finished at 82100 yuan/mt last evening, up 0.21%, with the low-end of 81270 yuan/mt and the end of 82880 yuan/mt. Trading volume was 95,000 lots, and open interest stood at 200,000 lots. On the macro level, the US CPI data for April showed that inflation resumed its downward trend and retail sales were unexpectedly flat last month, restoring market confidence that the Federal Reserve will cut interest rates in September. The US dollar index fell, which was bullish for copper prices. In terms of fundamentals, although some domestic refineries have been undergoing maintenance, social inventories and inventories in the hands of suppliers are both relatively high. In terms of consumption, due to the delivery of the SHFE front-month contract yesterday, there were few transactions in the market. If copper prices fall back, processing companies may be willing to accept goods, otherwise the market will maintain the status quo of on-demand replenishment. The copper prices will remain at high levels.


Overnight, the most-traded SHFE 2407 aluminum contract opened at 20,538 yuan/mt, with the highest and lowest prices at 20,645 yuan/mt and 20,450 yuan/mt before closing at 20,580 yuan/mt, up 95 yuan/mt or 0.46%. LME aluminum opened at $2,550.5/mt in the previous trading day, with its low and high at $2,539/mt and $2,620/mt respectively before closing at $2,600/mt, up 1.92%.

Summary: On the macro front, the US employment data was relatively weak, US CPI fell as expected in April, and the monthly retail sales rate unexpectedly fell in April, indicating that price pressures are easing, supporting the Fed's intention to maintain high interest rates; the domestic Ministry of Finance issued super-long special treasury bonds, coupled with new policy directions for real estate and new energy vehicles, is expected to drive the real economy. Fundamentally, as the power supply in Yunnan returned to stability, aluminum production resumption is still continuing. According to SMM's research, the annual production capacity is about 350,000 mt. Domestic inventories of aluminum ingots and billets continued to drop, but the inventory of aluminum ingots only decreased by 10,000 mt YoY. Domestic supply and demand contradictions may gradually emerge. Against the backdrop of an overall bullish macro sentiment, coupled with the resilient support of domestic downstream consumption, aluminum prices are expected to move rangebound.


LME lead opened at $2255/mt and closed at $2267.5/mt, up 0.8%, wit hthe high-end of $2295.5/mt and the low-end of $2246.5/mt.

The most traded SHFE 2407 lead contract prices opened at 18820 yuan/mt and rose by 0.62% to close at 18740 yuan/mt last evening, after hitting the highest point of 18890 yuan/mt and the lowest point of 18460 yuan/mt.


LME zinc opened at $2997/mt overnight, touching a high and a low of $3054/mt and $2960.5/mt respectively. LME zinc closed down $5.5/mt or 0.18% at $2983/mt. The trading volume increased to 15002 lots, and open interest lost 3609 lots to 237,000 lots. LME zinc inventory fell by 75 tons to 250,875 tons, a decrease of 0.03%. There was a strong bearishness, but the US CPI data rekindled expectations of a rate cut.

The most active SHFE 2407 zinc contract fell to a low of 23575 yuan/mt after opening at 23850 yuan/mt, and finally closed at 23660 yuan/mt, down 345 yuan/mt or 1.44%. Trading volume was down to 100,000 lots, and open interest grew by 750 lots to 111,000 lots. The shortage of ore supply has not been alleviated, supporting the price of SHFE zinc. Subsequent attention will be paid to the integer mark of 23,500 yuan/ton.


Overnight, SHFE 2406 tin contract went up slightly before pullback, closing at 272,070 yuan/mt, down 0.62%.

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 800-1,000 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 200-500 yuan/mt for Yunxi brand. Tin prices stayed at highs yesterday, leaving downstream companies on the sidelines. Few deals were heard among traders. Transactions were poor yesterday.


On May 15, the most-traded SHFE nickel contract opened at 144,460 yuan/mt, and closed at 144,380 yuan/mt, down 80 yuan/mt compared with the last trading day. Trading volume increased by 16,653 lots to 215,865 lots, and open interest decreased by 1,431 lots to 78,586 lots. The most-traded SHFE nickel contract fell rapidly to the lowest at 142,280 yuan/mt after opening and then rose. In the afternoon, it reached the highest point before falling, with a final decrease of 0.03%.

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