SMM Morning Comment For SHFE Base Metals (Feb 11)

SHANGHAI, Feb 11 (SMM) –

Copper

Overnight, LME copper opened at $9,408/mt, briefly dipped to $9,406.5/mt at the start, then fluctuated upward within a wide range, reaching a high of $9,467/mt near the session's end, and finally closed at $9,453/mt, up 0.14%. Trading volume reached 19,000 lots, and open interest stood at 288,000 lots. Overnight, the most-traded SHFE copper 2503 contract opened at 77,410 yuan/mt, initially edged up slightly before trending lower, hitting a low of 77,330 yuan/mt. It then fluctuated upward to a high during the session, maintained rangebound fluctuations near the end, reaching a high of 77,650 yuan/mt, and slightly pulled back to close at 77,570 yuan/mt, up 0.22%. Trading volume reached 22,000 lots, and open interest stood at 181,000 lots. Macro side, the US dollar index hovered at highs as Trump pledged to impose a 25% tariff on all steel and aluminum imports, limiting copper price gains. Tonight, Fed Chairman Jerome Powell is scheduled to attend a hearing and deliver the semi-annual monetary policy testimony, which could be a key factor influencing expectations for US Fed interest rate cuts in the near term. Fundamentally, copper prices remain strong, with relatively limited spot supply, while the spot market trading sentiment slightly improved WoW. As of Monday, February 10, SMM data showed copper inventories in major regions across China increased by 31,700 mt compared to last Thursday, reaching 304,800 mt. Total inventories rose by 139,000 mt compared to pre-holiday levels of 165,800 mt. Among them, Shanghai inventories were up by 71,100 mt, Guangdong by 37,400 mt, and Jiangsu by 29,000 mt compared to pre-holiday levels. In terms of prices, Trump's tariff policy continues to significantly disrupt the market, while expectations for the US Fed to hold rates steady in March have strengthened. However, based on current market reactions, copper prices are expected to see relatively small fluctuations today.

Aluminum

Overnight, the most-traded SHFE aluminum 2503 contract opened at 20,585 yuan/mt, hitting a high of 20,745 yuan/mt and a low of 20,560 yuan/mt, before closing at 20,730 yuan/mt, up 225 yuan/mt or 1.10% from the previous close. Yesterday, LME aluminum opened at $2,643/mt, reached a high of $2,664.5/mt and a low of $2,614/mt, and closed at $2,661/mt, up $33/mt or 1.26%.

On the macro front, intensified EU sanctions and US tariff pressures are expected to lead to structural adjustments in the global aluminum market in the short term. Continued attention is needed on trade policy developments in Europe and the US, as well as changes in demand in major consumer markets. China's Ministry of Foreign Affairs reiterated that there are no winners in trade wars or tariff wars, while the State Council Executive Meeting's discussions on boosting consumption provided some market confidence. On the fundamentals side, the resumption of aluminum production is putting renewed pressure on supply, with domestic operating capacity expected to rise slowly in February. Alumina average spot prices continued to weaken, driving aluminum costs lower. As of now, aluminum production costs have fallen below 18,000 yuan/mt, with industry profits exceeding 2,700 yuan/mt. In terms of inventory, post-holiday inventory buildup continues, with rapid increases expected this week. On the demand side, operating rates at leading aluminum processing enterprises rose 5.7 percentage points WoW to 56.8%. Although it is currently the off-season, operating rates for aluminum plate/sheet, strip and foil, secondary alloy, and extrusion enterprises have increased, particularly for automotive extrusion at top-tier enterprises, which are accelerating their resumption of operations, providing support for demand. Additionally, due to financial constraints and limited orders on hand before the holiday, stockpiling was relatively low. Post-holiday, there may be some stockpiling sentiment. As the Chinese New Year holiday ends, aluminum processing enterprises are gradually resuming operations, and demand is expected to recover. In the near term, focus on the impact of tariff events, post-holiday aluminum ingot inventory changes, and the pace of downstream resumption. SHFE aluminum is expected to continue fluctuating at highs in the short term.

Lead

Overnight, LME lead opened at $1,993/mt. During the Asian trading session, LME lead consolidated, fluctuating mainly between $1,990-2,000/mt. Entering the European session, concerns over the US tariff policy escalation caused the center of LME lead to shift downward, with intraday prices dropping to as low as $1,975.5/mt. By the end of the session, LME lead rebounded, closing at $1,997.5/mt, up by 0.38%.

Recently, SHFE lead has been fluctuating upward. However, in the spot market, as downstream enterprises have not fully resumed operations, those that have restarted production continue to consume pre-holiday lead ingot inventories. This has resulted in weak purchase willingness for high-priced lead, with spot lead discounts gradually widening. Mainstream regions' primary lead quotations are at discounts of around 200 yuan/mt against the SHFE lead 2503 contract ex-factory, increasing suppliers' willingness to transfer to delivery warehouses. Additionally, during the Lantern Festival period, downstream enterprises are expected to fully resume operations, and secondary lead enterprises are also expected to resume supply during the same period. With both supply and demand for lead ingots increasing, short-term social inventory is unlikely to reverse its upward trend.

Zinc

Overnight, LME zinc opened at $2,843/mt. After the opening, LME zinc fluctuated around the daily moving average. During the midday session, it quickly declined to a low of $2,822/mt, then rebounded from the low, reaching a high of $2,854.5/mt by the end of the session. It ultimately closed higher at $2,854/mt, up by $12/mt or 0.42%. Trading volume decreased to 5,937 lots, while open interest increased by 1,080 lots to 227,000 lots. Overnight, LME zinc recorded a bullish candlestick, with support provided by the 5-day moving average. The US raised import tariffs on steel and aluminum, and the US dollar index opened higher with a gap, exerting some pressure on zinc prices. However, the persistently low LME inventory continued to support LME zinc, which hovered at highs.

Overnight, the most-traded SHFE zinc 2503 contract opened at 23,730 yuan/mt. After the opening, SHFE zinc fluctuated rangebound around the daily moving average, then slightly declined to a low of 23,670 yuan/mt. Subsequently, SHFE zinc rebounded above the daily moving average, reaching a high of 23,815 yuan/mt during the session, and ultimately closed lower at 23,785 yuan/mt, down by 20 yuan/mt or 0.08%. Trading volume decreased to 40,277 lots, while open interest decreased by 127 lots to 92,416 lots. Overnight, SHFE zinc recorded a bullish candlestick, with support provided by the 10-day moving average. On Monday, SMM zinc inventory increased by 11,700 mt to 118,700 mt, and social inventory of zinc ingots continued to accumulate. However, downstream enterprises gradually resumed production after the holiday, and demand for zinc ingots is recovering. SHFE zinc hovered at highs.

Tin

On the hardware side, more than 15 chip producers have already adapted to the DeepSeek model, and related intelligent computing integrated machines are gradually being implemented. Meanwhile, multiple smartphone and automaker companies have successively announced their integration with and support for this model, continuously expanding its "circle of friends." Cao Zhennan, Deputy Director of the National Engineering Research Center for High-Performance Computing, stated that with open-source and open-access products like DeepSeek, the reduced costs could lead to a rapid expansion of applications, potentially growing by one or several orders of magnitude. Yesterday, SHFE tin prices gradually stabilized and remained rangebound at high levels. At the close, the price of the most-traded SHFE tin contract stabilized at around 257,600 yuan/mt. From a technical analysis perspective, SHFE tin prices showed weakened upward momentum this week and are likely to fluctuate rangebound. Additionally, the decrease in open interest reflects the gradual dissipation of sentiment caused by last week's supply disruptions. In summary, SHFE tin prices were relatively stable at the beginning of the week, overall exhibiting a rangebound fluctuation trend. In the spot market, as most downstream and end-user enterprises gradually resumed production, spot market transactions are recovering.

Nickel

The mainstream spot premium quotation range for Jinchuan nickel was 2,100-2,400 yuan/mt, with an average premium of 2,250 yuan/mt, down 300 yuan compared to the previous trading day. Russian nickel premiums/discounts were quoted in the range of -200 to 200 yuan/mt, with an average premium of 0 yuan/mt, up 50 yuan compared to the previous trading day. Futures: Nickel prices opened lower in the morning, with a decline of 0.27%, reaching a low of 126,320 yuan. Regarding spot premiums/discounts: Jinchuan brand nickel premiums slightly decreased WoW, likely due to the domestic refined nickel surplus and inventory buildup on LME nickel, despite the recent tight overseas nickel ore supply affecting prices. Spot premiums/discounts for other nickel plate brands in the spot market showed relatively small changes overall. Nickel prices fluctuated within a range today. Jinchuan brand nickel premiums showed slight loosening. Spot premiums/discounts for other nickel plate brands remained largely stable this month. Nickel prices fluctuated overall today, with macroeconomic uncertainties leading to cautious downstream procurement and a more cautious market sentiment. In the short term, nickel prices are expected to maintain a fluctuating trend within a range.

Regarding the Price Spread with Nickel Sulphate: Yesterday, nickel briquette prices were 126,000-126,350 yuan/mt, with an average price of 126,175 yuan/mt, up 775 yuan/mt compared to the previous trading day's spot price. Nickel sulphate remains at a discount to refined nickel.