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SMM Morning Comment For SHFE Base Metals On May 17

iconMay 17, 2024 10:04
LME copper prices opened at $10385/mt and closed at $10371.5/mt in last evening trading, a gain of 0.87%, with the low-end of $10310/mt and the high-end of $10445.5/mt.

SHANGHAI, May 17 (SMM) –


LME copper prices opened at $10385/mt and closed at $10371.5/mt in last evening trading, a gain of 0.87%, with the low-end of $10310/mt and the high-end of $10445.5/mt. Trading volume was 34,000 lots, and open interest stood at 338,000 lots. The most active SHFE 2407 copper contract prices opened at 82720 yuan/mt and finished at 83060 yuan/mt overnight, up 0.89%, with the low-end of 82410 yuan/mt and the high-end of 83150 yuan/mt. Trading volume was 57,000 lots and open interest stood at 215,000 lots. On the macro level, the CME short squeeze concern has not yet dissipated. Some short positions cannot deliver in time, resulting in an influx of longs, stimulating prices to rise further. Domestically, China and Russia will jointly promote the implementation of large-scale energy projects by Chinese and Russian enterprises. In terms of fundamentals, although refineries in the north have entered maintenance one after another and spot supply has decreased, it has not caused a supply shortage at present. It is expected that the maintenance will not change the current oversupply, and the supply in the spot market will remain relatively ample. In terms of consumption, downstream demand will increase after the delivery of the SHFE front-month contract, and replenishment will mainly be on demand. On Fundamentals, as of Thursday May 16, copper inventories across major Chinese markets stood at 410,400 mt, up 10,300 mt from Monday and 286,900 mt higher than the same period last year. Due to the influence of macro sentiment, copper prices will move strongly in the near future.


Overnight, the most-traded SHFE 2407 aluminum contract opened at 20,670 yuan/mt, with the highest and lowest prices at 20,780 yuan/mt and 20,650 yuan/mt before closing at 20,780 yuan/mt, up 45 yuan/mt or 0.22%. LME aluminum opened at $2,596/mt in the previous trading day, with its low and high at $2,563/mt and $2,627/mt respectively before closing at $2,588/mt, down 0.46%.

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 and increased expectations for the Fed to cut 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. The domestic aluminum operating capacity continued to grow. Around 660,000 mt of aluminium capacity in Yunnan has been resumed, and the remaining 630,000 mt are expected to be restarted and then reach full capacity in June. In addition, the arrivals of aluminum ingots in mainstream consumption areas were relatively small, the inventory pressure of upstream aluminum plants has eased, and the domestic inventory of aluminum ingots and billets continued to drop. Amid bullish macro sentiment, aluminum cost went up, and domestic downstream consumption found solid support. Aluminum prices are expected to swing on a strong note.


LME lead prices opened at $2273.5/mt and closed at $2292/mt last evening, up 0.73%, with the high-end of $2298/mt and the low-end of $2259.5/mt.

The most active SHFE 2407 lead contract prices opened at 18730 yuan/mt last evening, and closed at 18845 yuan/mt, an increase of 0.78%, with the high-end of 18855 yuan/mt and the low-end of 18680 yuan/mt.


LME zinc prices opened at $2988/mt last evening and touched an intraday high of $3007/mt, with the low-end of $2940.5/mt. It closed down $22/mt or 0.74% at $2961/mt. Trading volumes decreased to 10071 lots, with open interest rose 5025 lots to 242,000 lots. LME zinc inventories increased by 8,800 tons to 259,675 tons, an increase of 3.5%. The monthly rate of the U.S. import price index in April rose more than expected, which was good for the U.S. dollar index. Combined with the increase in LME inventories, LME zinc was suppressed downward. We will pay attention to the integer mark of $2,900/ton in the future.

The most active SHFE 2407 zinc contract prices opened at 23600 yuan/mt and closed at 23820 yuan/mt last evening, up 130 yuan/mt or 0.55%. The trading volume was down to 75819 lots, and open interest increased 3952 lots to 114,000 lots. The loosening of real estate restrictions has initially shown results, and market confidence has gradually recovered. In addition, the ore supply maintained a tight pattern, which supported the upward movement of SHFE zinc. However, the high zinc price suppressed downstream consumption, and the upward space of SHFE zinc will be limited.


SHFE 2406 tin contract rose slightly, closing at 275,780 yuan/mt, up 0.58%.

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 500-1,000 yuan/mt for SHFE 2406 tin contract, versus discounts of 600 yuan/mt to premiums of 300 yuan/mt for delivery brands and premiums of 200-500 yuan/mt for Yunxi brand. Tin prices pulled back after an initial rise. Inquiries from downstream market were moderate.


On May 16, the most-traded SHFE nickel contract opened at 144,870 yuan/mt, and closed at 146,620 yuan/mt, up 2,240 yuan/mt compared with the last trading day. Trading volume increased by 24,866 lots to 240,731 lots, and open interest increased by 19 lots to 78,605 lots. The most-traded SHFE nickel contract rose rapidly to the highest at 147,460 yuan/mt after opening and then fell. In the afternoon, it fluctuated at a relatively stable range, with a final increase of 1.71%.

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