SMM Morning Comment For SHFE Base Metals (Mar 10)

SHANGHAI, Mar 10 (SMM) –
Copper
Last Friday evening, LME copper opened at $9,679/mt, initially reaching a high of $9,691.5/mt. It then fluctuated downward, briefly rebounded during the session, and continued to decline, touching a low of $9,564/mt near the close. It slightly rebounded at the end, finally settling at $9,602/mt, down 0.9%. Trading volume reached 20,000 lots, and open interest stood at 303,000 lots. Last Friday evening, the most-traded SHFE copper 2504 contract opened at 78,440 yuan/mt, fluctuated initially, and touched a low of 78,330 yuan/mt. It then surged to a high of 78,910 yuan/mt during the session, fluctuated downward near the close, and finally settled at 78,430 yuan/mt, down 0.34%. Trading volume reached 36,000 lots, and open interest stood at 169,000 lots. Macro side, last week, Trump's erratic trade policies heightened market concerns over a US economic recession. Coupled with mixed February non-farm payrolls data, February non-farm payrolls recorded 151,000, slightly below market expectations, while the unemployment rate stood at 4.1%, the highest since November 2024. The labour market slowed, and US equities fluctuated under pressure. Last Friday, Powell also spoke to stabilize market expectations, stating that there was no rush to cut interest rates before the impact of Trump's policies became clearer, leading to a pullback in copper prices. This week, US inflation data will be the market's focal point. Fundamentally, copper prices have recently fluctuated upward, with downstream enterprises primarily purchasing as needed, and market trading sentiment remains relatively cautious. Looking ahead to this week, as the delivery date approaches, suppliers are expected to maintain a strong sentiment to stand firm on quotes, with prices likely to remain firm. However, due to the pressure from abundant warehouse warrant resources, spot premiums and discounts are unlikely to see significant upward movement. In terms of prices, overseas tariffs continue to disrupt the market, the US dollar index remains low, and domestic policy expectations provide strong support, creating an overall positive outlook. Copper prices are expected to fluctuate at highs today.

Aluminum
Futures: Last Friday, the SHFE aluminum 2504 contract opened at 20,855 yuan/mt, with a high of 20,920 yuan/mt and a low of 20,790 yuan/mt, closing at 20,880 yuan/mt, down 5 yuan/mt or 0.02% from the previous settlement. On the same day, LME aluminum opened at $2,699/mt, reached a high of $2,711/mt and a low of $2,675.5/mt, and closed at $2,689/mt, down $14/mt or 0.52%.
Summary: Macro side, US employment data fell short of expectations, strengthening the outlook for multiple interest rate cuts by the US Fed this year, leading to a pullback in the US dollar index. Domestically, the Two Sessions emphasized stabilizing the economy, providing macro support for aluminum prices. Fundamentals side, domestic aluminum production resumption is progressing, with capacity expected to be released by the end of March. Inventory-wise, aluminum inventories continued to decline this week. According to the SMM survey, aluminum inventories fell by 18,000 mt WoW to 868,000 mt today. Coupled with the "golden March and silver April" peak season, operating rates of aluminum processing enterprises continued to rise, strengthening aluminum consumption support. Overall, macro factors are mixed, with domestic macro support remaining intact, while overseas trade barriers increase but with high uncertainty. Fundamentals side, both supply and demand are growing. As the consumption peak season approaches, most sectors see rising order volumes and operating rates, combined with destocking of aluminum ingot social inventories, providing strong support for aluminum prices. In the short term, aluminum prices are expected to fluctuate upward at highs.
Lead
Last Friday, LME lead opened at $2,035/mt, fluctuated downward during the Asian session, weakened further to a low of $2,012/mt in the European session, and rebounded slightly before closing at $2,016/mt, down $23/mt or 1.13%.

Last Friday night, the most-traded SHFE lead 2504 contract opened at 17,400 yuan/mt, dipped to a low of 17,355 yuan/mt in early trading, and slightly rebounded to close at 17,405 yuan/mt, down 70 yuan/mt or 0.4%.
Under the macro disturbances and the broad decline in non-ferrous metals, the bullish sentiment in lead futures has eased. Domestic prices will still require further policy guidance and the implementation of trade-in policies. Fundamentals side, on one hand, the resumption of production at primary and secondary lead enterprises and the commissioning of new secondary refined lead capacity have brought more refined lead supply. However, at the same time, raw material supplies such as scrap batteries and lead concentrates are also becoming increasingly tight. Lead prices are fluctuating at high levels, with weak downstream purchase enthusiasm. As the spot-futures price spread widens, suppliers are increasing warehouse transfers for delivery. This week marks the week before the delivery of the SHFE 2503 contract, and attention should be paid to the risk of visible inventory accumulation and lead price pullback pressure.
Zinc
Last Friday, LME zinc opened at $2,929/mt. At the beginning of the session, LME zinc reached a high of $2,929/mt, then fluctuated around the daily average line. During the night session, it declined to a low of $2,873.5/mt, followed by a period of low-level fluctuations, and finally closed down at $2,882/mt, a decrease of $44/mt or 1.5%. Trading volume decreased to 11,584 lots, and open interest fell by 3,265 lots to 220,000 lots. Last Friday, LME zinc formed a bearish candlestick, with support provided by the 5-day moving average below. LME zinc inventory decreased by 775 mt to 160,175 mt, a decline of 0.48%. The US unemployment rate for February exceeded the previous value, and the US dollar index remained at a low level, supporting LME zinc to sustain its high levels. However, market concerns over demand persisted due to tariff disruptions, limiting the upward momentum of LME zinc.
Last Friday, the most-traded SHFE zinc 2504 contract opened at 23,880 yuan/mt. At the beginning of the session, SHFE zinc slightly declined to a low of 23,820 yuan/mt, then rebounded from the low and climbed all the way up, reaching a high of 23,975 yuan/mt before falling back near the daily average line. It eventually closed down at 23,915 yuan/mt, a decrease of 45 yuan/mt or 0.19%. Trading volume decreased to 62,154 lots, and open interest fell by 3,328 lots to 86,292 lots. Last Friday, SHFE zinc formed a bullish candlestick, with resistance from the 5-day moving average above. Although domestic zinc ingot inventory continued destocking, reflecting a gradual recovery in downstream zinc consumption, domestic zinc concentrate TCs continued to rise. In March, expectations for production increase in refined zinc weakened the support from the supply side for zinc prices, pressing the center of SHFE zinc downward.

Tin
International macro front, the US February ADP employment data fell significantly below expectations, putting pressure on the US dollar index, which pulled back to around the 104 mark. Coupled with the announcement of Germany's large-scale infrastructure plan, this drove the overall rise in the non-ferrous metals sector. During China's Two Sessions, the government work report proposed multiple growth-stabilizing policies, including a fiscal deficit rate planned at 4% and the issuance of over 11 trillion yuan in new special and local government bonds. Market expectations for growth-stabilizing policies heated up, and Chinese assets generally closed higher. However, as the policy statements did not exceed expectations, the market maintained a cautious attitude toward macro guidance, limiting the upside room for tin prices.
From the perspective of the domestic tin ore market, overall, the supply side remains uncertain. Although there is an expectation of resumed production at Wa State tin mines in Myanmar, actual resumption requires a three-month preparation period, leaving the short-term tight supply situation unresolved. The escalation of M23 armed conflict in the DRC threatens local tin ore transportation, further exacerbating supply uncertainties. Domestic smelters' operating rates remain low, spot market circulation is tight, LME tin inventory continues to decline, while domestic social inventory buildup is evident. On the demand side, downstream enterprises have increased just-in-time procurement, and spot market orders have risen. However, overall consumption recovery still requires time for validation. Demand growth in the electronics and new energy sectors supports tin prices, while traditional consumption sectors remain weak, and market sentiment remains cautious.
In summary, forecasting tin price trends, SHFE tin is expected to fluctuate rangebound between 255,000-265,000 yuan/mt in the short term. Supported by favourable macro factors and low inventory, prices may maintain a relatively strong trend. However, attention should be paid to the progress of Wa State's production resumption and the risk of pullback caused by insufficient downstream consumption sustainability. Investors are advised to monitor signals from Two Sessions policies boosting industrial metal demand, domestic and overseas tin inventory changes, Wa State tin mine resumption progress, US Fed policy trends, and the evolution of the global trade environment. Short-term range trading is recommended, while mid-term strategies await the clarification of the supply-demand imbalance.
Nickel
Last week, nickel prices fluctuated upward, with spot prices ranging between 127,400-129,700 yuan/mt, while SHFE nickel futures prices fluctuated between 124,600 yuan/mt and 131,400 yuan/mt, successfully breaking through the 130,000 yuan threshold. The pullback in the US dollar index provided support for base metals, and the ongoing rainy season in Indonesia and the Philippines also supported nickel ore prices. Although favourable macro factors boosted overall market optimism, refined nickel inventory remained high, limiting short-term upside potential. From a macro perspective, Indonesia's frequent policy announcements, particularly measures to control this year's RKAB quotas to stabilize nickel prices and the provisions on foreign exchange for natural resource exports in Presidential Decree No. 8, reflect the Indonesian government's intention to guide nickel prices and enhance product value. Additionally, the rainy season in the Philippines is nearing its end, with mines gradually offering March shipment quotes, and FOB transaction prices have softened compared to pre-rainy season levels. However, sentiment to stand firm on quotes for medium- to high-grade nickel ore remains. Domestically, stainless steel mills resumed operations after the holiday, showing optimism for high-grade NPI demand, but NPI producers' acceptance of high-priced nickel ore was limited, leading to a slight decline in tender prices for medium-grade Philippine nickel ore. Fundamentally, nickel ore supply remains tight, and the absolute price of nickel ore is expected to rise, albeit at a slower pace. The end of the rainy season in Sulawesi will impact the specific changes in nickel ore market circulation. Looking ahead to next week, nickel prices may continue to be influenced by the tug-of-war between favourable macro factors and bearish fundamentals, with short-term upside potential remaining, but overall gains are likely to be limited.