SMM Morning Comment For SHFE Base Metals (Feb 27)

SHANGHAI, Feb 27 (SMM) –
Copper
Overnight, LME copper opened at $9,509/mt, initially reaching a high of $9,530/mt before fluctuating downward to a low. After a slight rebound near the close, it continued to pull back, touching a low of $9,411.5/mt and finally closing at $9,423/mt, up 0.3%. Trading volume reached 22,000 lots, and open interest stood at 296,000 lots. Overnight, the most-traded SHFE copper 2504 contract opened at 77,310 yuan/mt, initially hitting a high of 77,350 yuan/mt before fluctuating downward to an intraday low of 76,900 yuan/mt. It then rebounded near the close and finally settled at 77,100 yuan/mt, down 0.1%. Trading volume reached 29,000 lots, and open interest stood at 165,000 lots. Macro side, Trump stated on Wednesday that his administration would soon announce a 25% tariff on goods imported from the EU. He also raised hopes of another delay in imposing high new tariffs on imports from Mexico and Canada, stating that tariffs on Mexico and Canada would take effect on April 2, about a month later than next week's deadline. Overall, with expectations of US tariffs on copper heating up, LME copper strengthened, but the impact on SHFE copper was limited. Fundamentally, high copper prices in the short term remain an obstacle to destocking of processed materials. Suppliers reported difficulties in selling, with both buyers and sellers showing low activity. In terms of prices, copper prices are expected to be boosted by tariff expectations today.
Aluminum
Futures Market: Overnight, the most-traded SHFE aluminum 2504 contract opened at 20,650 yuan/mt, hit a high of 20,660 yuan/mt, a low of 20,500 yuan/mt, and closed at 20,560 yuan/mt, down 50 yuan/mt or 0.24%. Yesterday, LME aluminum opened at $2,643/mt, reached a high of $2,665/mt, a low of $2,621/mt, and closed at $2,628/mt, down $11/mt or 0.42%.
Summary: Macro side, with US President Trump wielding the "tariff stick" and sparking inflation concerns, on Tuesday (February 25, US Eastern Time), Richmond Fed President Thomas Barkin made hawkish remarks, stating that the US Fed might have to raise interest rates to counter economic trends that could drive inflation higher. Fundamentals side, cost-side support continued to weaken; supply side saw slight and stable increases with relatively small changes overall; demand side, driven by rising aluminum prices, end-user enterprises adopted a wait-and-see approach, and shipments from downstream aluminum semis enterprises showed no significant improvement. The turnover days of raw material inventories at factories struggled to rise, with procurement mainly based on rigid demand and consumption of finished product inventories. Domestic aluminum ingot and aluminum billet social inventories climbed to 1.194 million mt, after consecutively breaking through the critical thresholds of 1.1 million mt and 1.2 million mt. Most suppliers are optimistic about the aluminum market outlook and expect that after entering March, the inventory turning point will gradually emerge. With policy support, aluminum ingot inventories are expected to remain low in the long term, and spot market sentiment of holding back cargoes is strengthening. Macro sentiment remains unstable, consumption realization still needs observation, and the market cautiously anticipates aluminum price fluctuations and adjustments.
Lead
Overnight, LME lead opened at a low of $1,998/mt and fluctuated upward during the Asian session. In the European session, it climbed to a high of $2,024/mt but came under pressure due to the US dollar fluctuating at highs, dipping to a low of $1,988/mt. It slightly rebounded at the close, ending at $2,003.5/mt, up 0.17%.

Overnight, the most-traded SHFE lead 2504 contract opened at 17,160 yuan/mt. With shorts reducing positions, SHFE lead initially touched a high of 17,195 yuan/mt before fluctuating downward to a low of 17,125 yuan/mt. It slightly rebounded at the close, ending at 17,175 yuan/mt, up 0.15%.
Recently, several secondary lead smelters reported good arrivals of scrap batteries, with ample raw material inventory. Additionally, some enterprises are expected to increase production in March, suggesting that raw material prices may still fluctuate at highs. Currently, in-plant inventory of lead ingots is gradually depleting, but social inventory remains high. From the perspective of terminal consumption, the post-holiday restocking of e-bike and automotive battery markets by dealers was less than in previous years, with relatively scattered procurement. Orders for producers showed limited improvement. At present, downstream lead ingot procurement remains need-based, with overall consumption performing moderately. In summary, lead prices are likely to maintain a fluctuating trend in the short term.
Zinc
Overnight, LME zinc opened at $2,817/mt. At the beginning of the session, LME zinc fluctuated around the daily moving average. During European trading hours, bears reduced positions, driving LME zinc upward to a high of $2,847.5/mt. Subsequently, LME zinc declined to a low of $2,796/mt. During the night session, it recovered part of the losses but slightly fell at the end, closing up at $2,808/mt, an increase of $2.5/mt or 0.09%. Trading volume decreased to 93,400 lots, and open interest fell by 282 lots to 233,000 lots. Overnight, LME zinc recorded a long upper shadow bearish candlestick, with support provided by the lower Bollinger Band. On February 26, LME zinc inventory increased by 600 mt to 165,375 mt, a rise of 0.36%. Overseas social inventories continued to rise, putting pressure on LME zinc. Trump's frequent tariff policies have created market uncertainty, while the continuous increase in overseas inventories has exerted some resistance to LME zinc's upward movement.

Overnight, the most-traded SHFE zinc 2504 contract opened at 23,605 yuan/mt. At the beginning of the session, SHFE zinc reached a high of 23,645 yuan/mt. Subsequently, with bears increasing positions, SHFE zinc plunged to a low of 23,435 yuan/mt. However, as bears reduced positions, SHFE zinc rebounded, recovering most of the losses and recording a "V"-shaped reversal. It ultimately closed down at 23,550 yuan/mt, a decrease of 15 yuan/mt or 0.06%. Trading volume fell to 55,507 lots, while open interest increased by 1,386 lots to 91,723 lots. Overnight, SHFE zinc recorded a bearish candlestick, with resistance from multiple moving averages above and support from the lower Bollinger Band below. Improvements on the supply side have driven processing fees upward, while downstream consumption demand is expected to gradually recover. The combination of supply easing expectations and potential consumption improvement suggests that zinc prices may maintain a fluctuating trend in the short term. Further attention should be paid to more macro front guidance.
Tin
Signs of weakening consumer demand in the US economy have emerged again, constrained by persistently high interest rates and severe weather. US new home sales in January fell to a three-month low. As growth expectations fade and inflation concerns remain elevated, discussions of US stagflation have intensified, reigniting expectations of an interest rate cut. A series of weak economic data has led the US bond market to bet that the US Fed will soon shift its focus from inflation concerns to worries about slowing economic growth, pushing the 10-year US Treasury yield down for the sixth consecutive day to a year-to-date low, providing some support for gold prices. However, last night, the Wa State Bureau of Mines and Industry issued a public notice detailing the procedures for obtaining mining, beneficiation plant, and exploration licenses. Specific details include: First, companies requiring mineral licenses must submit written application materials to the Wa State Industrial and Mineral Management Bureau Office (application materials include: Wa State legal representative ID card, business license, copies of Wa State legal representative's property or land ownership certificate, and the application form)..... Most market participants interpreted this as a signal for the resumption of tin ore production in the Wa State Manxiang mining area. The night session saw a significant pullback, with prices dropping sharply to 256,820 yuan/mt. The spot market remained quiet yesterday, but with the sharp pullback in tin prices, today's spot market transactions are expected to regain momentum.
Nickel
The mainstream spot premium quotation range for Jinchuan No. 1 nickel was 1,700-1,900 yuan/mt, with an average premium of 1,800 yuan/mt, up by 50 yuan compared to the previous trading day. The premium/discount quotation range for Russian nickel was -100 to 100 yuan/mt, with the average price at parity, unchanged from the previous trading day. Futures: Nickel prices fluctuated after opening today, down by 0.43%, reaching a low of 123,340 yuan/mt. Regarding spot premiums/discounts: Jinchuan brand nickel rose by 50 yuan compared to the previous trading day, mainly due to the contract rollover of the current most-traded contract. From a technical perspective and market sentiment, the SHFE nickel 2503 contract showed rangebound fluctuations in the morning session, with moderate market trading activity. Regarding the price spread with nickel sulphate: Today, nickel briquette prices were 123,400-123,600 yuan/mt, with an average price of 123,500 yuan/mt, down by 75 yuan/mt compared to the previous trading day's spot price. Nickel sulphate remains at a discount to refined nickel.