SMM Morning Comment For SHFE Base Metals (Mar 21)

SHANGHAI, Mar 21 (SMM) –
Copper
LME copper opened at $9,934 last night, reaching a high of $9,986.5 during the session before fluctuating downward to hit a low of $9,906 and finally closing at $9,910. It fell $87.5 from the previous close of $9,997.5, a decline of 0.87%. SHFE copper 2505 contract opened at 81,310, reached a high of 81,420, and touched a low of 81,020. The latest price was 81,310, down 40 from the previous close of 81,670, a decrease of about 0.49%. Trading volume was 44,832, with open interest at 243,630. Overall, prices showed significant volatility after the opening, initially falling to a low point, followed by a fluctuating trend. On the macro side, the US Fed will start to slow the pace of balance sheet reduction on April 1. In his press conference, Fed Chairman Powell released several policy signals. He stated that while the US economy is strong, there are uncertainties, and the risk of an economic recession "has risen but is not yet high." The Fed is in a position to cut interest rates or maintain its current policy stance, but it will not rush to cut rates. Trump also urged the Fed to cut interest rates, and market concerns over a US economic recession eased, leading the US dollar index to rise again, putting pressure on copper prices. Fundamentally, as copper prices continued to rise, end-use consumption was suppressed, and destocking slowed. Meanwhile, in South China, due to reduced supply, consumption remained moderate, and inventories continued to decline, with premiums remaining high. Some suppliers may take the opportunity to ship east China's inventory to South China. As of Thursday, March 20, SMM national mainstream region copper inventories decreased by 2,600 mt to 346,400 mt compared to Monday, and were down 9,100 mt from the previous Thursday, achieving three consecutive weeks of weekly destocking. Currently, they have pulled back 30,600 mt from the year's high and are 48,600 mt lower YoY. In summary, with the US dollar index stabilizing and physical buying restrained by high copper prices, the upside for copper prices today may be limited.
Aluminum
Futures Market: Overnight, the most-traded SHFE aluminum 2505 contract opened at 20,875 yuan/mt, reached a high of 20,895 yuan/mt, and a low of 20,780 yuan/mt, closing at 20,840 yuan/mt, down 55 yuan/mt, or 0.26%. LME aluminum opened at $2,674/mt, reached a high of $2,691/mt, and a low of $2,653/mt, closing at $2,657/mt, down $16/mt, or 0.60%.
Summary: From a macro perspective, in the short term, aluminum prices benefit from the sentiment boost of monetary policy easing expectations and trade friction easing, providing a clearer upward drive; however, one must be cautious of the regional supply surplus risk brought by Indian export shifts and the potential pressure of trade negotiation outcomes falling short of expectations. Domestically, the pressure to stabilize the exchange rate has eased, and the market interest rate center has clearly risen, with phased monetary policy goals gradually being achieved. However, there is still significant uncertainty in overseas policies, and constraints remain. At the same time, the short-term stabilization of the domestic economy and the long-term improvement in macro demand, along with double-digit growth in private manufacturing investment and continuous enhancement of the innovation capabilities of the private economy, mean that although the expectation of monetary easing still exists, it is not urgent. Fundamentally, the aluminum industry chain shows significant bullish signals: according to SMM, on March 20, domestic mainstream consumption area electrolytic aluminum ingot inventory was 839,000 mt, down 28,000 mt WoW; LME aluminum inventory also decreased by 1,525 mt, a 0.33% drop, indicating a clear destocking trend and the ongoing effect of the peak consumption season. If expectations for US Fed interest rate cuts increase or if trade relations between the US and Europe further ease, aluminum prices may continue to fluctuate upward in the short term. It is necessary to closely monitor changes in US tariff policies and the actual release of downstream demand.
Lead
Futures Market: Overnight, LME lead opened at $2,089.5/mt, briefly touched a high of $2,095.5/mt, and then fluctuated downward. Due to the strong rise in the US dollar index, LME lead continued to weaken after entering the European session, hitting a low of $2,048.5/mt before closing at $2,049.5/mt, down 1.89%. Overnight, the most-traded SHFE lead 2505 contract opened lower with a gap at 17,580 yuan/mt, briefly touched a high of 17,620 yuan/mt, and was dragged down by LME lead, reaching a low of 17,550 yuan/mt, and finally closed at 17,580 yuan/mt, down 0.51%.
This week, the SHFE 2503 lead contract completed delivery, and social lead ingot inventories accumulated. Recently, primary lead smelters in Henan entered maintenance, leading to a temporary tightening of lead supply. At the same time, some imported lead ingots completed customs clearance and entered the domestic market, with most going directly to factories. Some secondary lead smelters indicated that self-pick-up at ports was at a discount of 200 yuan/mt against the SMM 1# lead average price, and some downstream battery companies mentioned that a small discount could be delivered. Recently, SHFE lead has been fluctuating upward, and attention should be paid to the marginal changes in refined lead supply.
Zinc
Overnight, LME zinc opened at $2,929/mt. At the start of the session, an increase in long positions pushed LME zinc to a high of $2,955/mt. Subsequently, short positions targeted LME zinc, causing its center to shift and fluctuate around the daily average. However, with another increase in short positions, LME zinc fell again, reaching a low of $2,901.5/mt during the night session. By the end of the session, the center returned to near the daily average, closing at $2,919/mt, down $85/mt, or 0.29%. Trading volume increased to 12,536 lots, and open interest rose by 978 lots to 223,000 lots. Overnight, LME zinc recorded a four-day winning streak, with the daily candlestick's center moving lower, supported by the 60-day moving average. The market saw a generally dovish stance from the US Fed, leading to a rise in the US dollar index and a pullback in non-ferrous metals, including LME zinc.
Overnight, the most-traded SHFE zinc contract opened at 23,785 yuan/mt. At the beginning of the session, a tug-of-war between longs and shorts caused SHFE zinc to fluctuate rangebound around the daily average, touching a low of 23,745 yuan/mt. Later, an increase in long positions lifted the center, reaching a high of 23,855 yuan/mt by the end of the session. It closed at 23,840 yuan/mt, up 80 yuan/mt, or 0.34%. Trading volume decreased to 66,741 lots, and open interest fell by 771 lots to 124,000 lots. Overnight, SHFE zinc recorded a three-day winning streak, but faced pressure from various moving averages. As zinc prices declined, downstream enterprises increased buying the dip, with SMM social inventory dropping by over 7,000 mt, providing some support to zinc prices.
Tin
The Congolese military confirmed on March 20 that the rebel group "M23 Movement" had seized control of the mining town of Walikale in North Kivu Province, eastern DRC. A spokesperson for the DRC military told the media on the 20th, "The enemy has taken control of Walikale." The "M23 Movement" revealed on the evening of the 19th that it had gained control of the town of Walikale. The area where Walikale is located is rich in mineral resources, particularly tin ore. Due to the activities of the "M23 Movement" in eastern DRC, Alphamin Resources announced on March 13 that it would suspend mining operations at the Bisie tin mine in DRC and evacuate personnel from the site. The Bisie tin mine is the world's third-largest tin mine. Influenced by the news from DRC, SHFE tin prices slightly rebounded during the night session, with the price center rising to around 281,000 yuan/mt. In the spot tin ingot market, trading remained sluggish yesterday. Most traders reported that despite a pullback in SHFE tin prices, restocking interest from downstream and end-user enterprises was lower than expected, leading to overall poor market transactions.

Nickel
Spot premiums and discounts: The mainstream spot premium quotation range for Jinchuan No. 1 nickel was 1,800-1,900 yuan/mt, with an average premium of 1,850 yuan/mt, up 50 yuan/mt from the previous trading day. The premiums and discounts for Russian nickel ranged from -200 to 100 yuan/mt, with an average discount of -50 yuan/mt, unchanged from the previous trading day. Futures: Yesterday, nickel prices showed a fluctuating trend at the opening. As of 11:30, the closing price was 129,686 yuan/mt, down 1.31% from the previous trading day's settlement price, with the lowest point reaching 127,940 yuan/mt. In terms of spot premiums and discounts, the Jinchuan brand nickel increased by 50 yuan compared to the previous trading day. This increase was mainly due to the night session's decline, leading traders to appropriately raise premiums to seek profits. From a technical perspective, SHFE nickel futures contracts showed a downward trend after the opening, possibly due to cooling speculative sentiment from Indonesia, causing some long positions to reduce their holdings. With prices falling back below the 130,000 yuan/mt level, overall market sentiment appeared cautious.