SMM Morning Comment For SHFE Base Metals (Mar 17)

SHANGHAI, Mar 17 (SMM) –
Copper
Last Friday evening, LME copper opened at $9,797/mt, peaked at $9,822.5/mt, and hit a low of $9,761.0/mt during the session, eventually closing at $9,793.0/mt. The overall trend showed an initial rise, followed by a decline and then fluctuations, with a % change of 0.45%. Trading volume reached 15,419 lots, and open interest stood at 302,095 lots. Last Friday evening, the most-traded SHFE copper 2504 futures contract opened at 80,120 yuan/mt, reached a session high of 80,160 yuan/mt, and a low of 79,690 yuan/mt, finally closing at 79,880 yuan/mt. The overall trend exhibited a fluctuating downward pattern, with a % change of 0.00%. Trading volume was 14,333 lots, and open interest totaled 143,098 lots. Macro side, the US consumer confidence index for March declined for the third consecutive month, while consumer expectations for future inflation rose, with the annual inflation rate for the next year expected to reach 4.9%, the highest level since 2022. Additionally, the US Commerce Secretary indicated that tariffs on imported automobiles might be imposed next month. The US dollar index jumped initially and then pulled back, still hovering near a four-month low, providing support for copper prices. Fundamentally, copper prices continued to rise, while spot consumption remained weak, and downstream purchase willingness was significantly under pressure. Moreover, today marks the last trading day for the 2403 contract, and spot premiums are expected to remain relatively stable, with downstream consumption unlikely to improve. In summary, with the US dollar index maintaining a low level, copper prices are expected to find support at the bottom today.
Aluminum
Futures Market: Last Friday, the most-traded SHFE aluminum 2505 contract opened at 20,985 yuan/mt, hit a high of 20,990 yuan/mt, a low of 20,905 yuan/mt, and closed at 20,935 yuan/mt, down 55 yuan/mt or 0.26%. On the same day, LME aluminum opened at $2,683/mt, reached a high of $2,688.5/mt, a low of $2,678.5/mt, and closed at $2,688.5/mt, up $6.5/mt or 0.24%.
Summary: Macro side, US consumer confidence plunged in March, while inflation expectations surged. Domestically, the favorable macro tone remains unchanged, with the government focusing on increasing policy intensity and fostering positive interaction and synergy between policy and market forces to maximize policy effectiveness, providing bullish support for aluminum prices. Fundamentals side, the tug-of-war between alumina buyers and sellers continues, with weekly alumina operating rates declining. Alumina fundamentals remain slightly oversupplied, and spot alumina prices are likely to fluctuate downward in the short term. Domestic aluminum production resumption continues, and with weak spot prices for alumina and petroleum coke, cost-side support for aluminum continues to weaken. Aluminum ingot social inventory continued to decline during the week, and aluminum processing enterprises maintained a recovery trend in the short term. However, consumption recovery has been slightly below expectations, and high aluminum prices have suppressed downstream purchase willingness, limiting the increase in operating rates for some enterprises. Meanwhile, spot premiums and discounts in various regions are constrained. Aluminum prices are expected to hover at highs in the near term, with close attention to changes in US tariff policies and the actual release of downstream demand. Overall, the macro side presents a mix of bullish and bearish factors. Domestically, the favorable macro tone remains unchanged, while overseas trade barriers are increasing but with high uncertainty. Fundamentals side, both supply and demand are growing. As the consumption peak season approaches, most sectors are seeing increases in order volumes and operating rates, coupled with aluminum ingot social inventory destocking, providing strong support for aluminum prices. Aluminum prices are expected to fluctuate upward in the short term.
Lead
Last Friday, LME lead opened at $2,077.5/mt, fluctuated upward during the Asian session, and climbed to a high of $2,090/mt during the European session. However, it weakened under pressure in late trading due to the upward correction of the US dollar index, dipping to $2,063/mt and closing at $2,068.5/mt, down 0.22%. On Friday night, the most-traded SHFE lead 2504 contract opened at 17,680 yuan/mt, briefly touched a high of 17,685 yuan/mt in early trading, then fluctuated downward, dipping to 17,610 yuan/mt in late trading and closing at 17,635 yuan/mt, up 0.14%.
Primary lead enterprises maintained stable or slightly increased production, while the delivery of the SHFE lead front-month contract reduced short-term market circulating supply, with spot expected to maintain premium trading. For secondary lead, as lead prices strengthened and smelters' profits improved, the discount for secondary refined lead shipments may widen. Meanwhile, end-use consumption in the lead-acid battery market remained weak, with production relatively stable. Rising raw material prices for lead, antimony, and tin have significantly increased cost pressure on battery enterprises, leading to raw material purchases being made only as needed. Overall, lead prices are likely to hover at highs in the short term.
Zinc
Last Friday, LME zinc opened at $2,956/mt. In early trading, LME zinc fluctuated around the daily average line, briefly dipping to $2,955/mt. During the European trading session, bulls increased positions, driving LME zinc to fluctuate upward and reach a high of $2,994.5/mt. Subsequently, profit-taking by bulls caused LME zinc's center to return near the daily average line, ultimately closing higher at $2,985.5/mt, up by $27/mt or 0.91%. Trading volume decreased to 12,310 lots, while open interest increased by 5,729 lots to 223,000 lots. Last Friday, LME zinc recorded a four-day winning streak, with the daily candlestick center moving upward, supported by various moving averages below. The US dollar index fluctuated at lows last Friday, providing support for base metal prices, while the US March consumer confidence index declined, leading LME zinc to jump initially and then pull back.
Last Friday, the most-traded SHFE zinc 2505 contract opened at 24,215 yuan/mt. In early trading, shorts entered the market, pressuring SHFE zinc to move downward, with its center shifting near the daily average line. By the end of trading, the center further declined to a low of 24,075 yuan/mt before returning near the daily average line for consolidation, ultimately closing higher at 24,140 yuan/mt, up by 10 yuan/mt or 0.04%. Trading volume decreased to 59,831 lots, while open interest increased by 3,747 lots to 120,000 lots. Last Friday, SHFE zinc recorded a bearish candlestick, though the MACD bullish bar expanded. On the macro side, domestic consumption policies provided support, coupled with expectations for production cuts at overseas smelters on the fundamentals side, leading zinc prices to fluctuate at highs.
Tin
International macro perspective, the escalation of armed conflict in the DRC has significantly impacted global tin ore supply. Alphamin's suspension of operations at its Bisie mine has heightened market concerns over supply-side issues. Meanwhile, a weaker US dollar and favorable domestic policies have also provided support for tin prices. In the domestic tin ore market, the overall supply-demand pattern remains tight. In terms of supply, although the operating rates of refined tin smelters in Yunnan and Jiangxi have slightly rebounded, they are still constrained by tight raw material supply. The resumption progress in the Wa State mining area in Myanmar has fallen short of expectations, and the shutdown of the Bisie mine has further widened the supply gap. On the demand side, downstream solder enterprises primarily make just-in-time procurement, with high prices suppressing restocking willingness. However, the "trade-in" policy and high production schedules in the home appliance sector provide potential support for demand. Social inventory remains at a low level. Considering the dynamics of domestic and overseas markets and policy changes, tin prices are expected to continue to fluctuate upward next week. Investors should monitor developments in the DRC situation, the resumption progress in Wa State, and macro policy directions. Cautious operations are advised to avoid the risk of chasing high prices.
Nickel
Last week, nickel prices maintained a strong upward trend, successfully breaking through 135,000 yuan on Friday, driven by the tin market. Although market sentiment weakened slightly, it remained dominant. Spot premiums for Jinchuan-brand nickel declined this week, possibly due to traders lowering prices to boost transactions, but deals still fell short of expectations, with end-users mainly adopting a wait-and-see approach. Nickel sulphate prices continued to rise, with the price spread between nickel sulphate and refined nickel remaining in a discount state. On the macro front, the US Federal Reserve's February CPI data came in below market expectations, fueling expectations of an interest rate cut, which pushed up the most-traded nickel prices. Meanwhile, the rainy season in the Philippines is nearing its end, and nickel ore shipments are expected to increase, but current supply remains tight. Prices of medium- and high-grade nickel ore softened slightly, while Indonesian nickel ore prices remained stable with a strong trend. Absolute prices are expected to rise, albeit at a slower pace. The Indonesian Ministry of Energy and Mineral Resources' new policy adjusting the HPM pricing method caused some market sentiment fluctuations. Fundamentally, tight domestic nickel ore supply weakened production incentives for smelters, while Indonesian NPI production remained stable. Downstream, stainless steel production schedules are expected to increase, and the tightening supply-demand relationship for high-grade NPI supports relatively stable prices with a strong trend. SHFE nickel prices are expected to continue being influenced by a combination of sentiment and fundamentals next week, with potential narrowing in price fluctuations.