SMM Morning Comment For SHFE Base Metals (Mar 27)

SHANGHAI, Mar 27 (SMM) –

Copper

Overnight, LME copper opened at $9,942/mt, reaching a high of $9,971/mt during the session, and a low of $9,900/mt at the end of the session, closing at $9,907/mt. The overall trend initially fluctuated upward before pulling back. The decline was 1.86%, with a trading volume of 31,000 lots and open interest of 303,000 lots. Overnight, the most-traded SHFE copper 2505 contract opened at 81,670 yuan/mt, reaching a high of 81,870 yuan/mt and a low of 81,350 yuan/mt during the session, closing at 81,520 yuan/mt. The overall trend fluctuated downward. The decline was 1.08%, with a trading volume of 62,000 lots and open interest of 240,000 lots. On the macro front, Trump announced a 25% tariff on imported cars on Wednesday, and insiders revealed that the US would accelerate the imposition of copper tariffs, several months ahead of the expected timeline. This has raised concerns about escalating trade tensions and a slowdown in global economic growth. The uncertainty brought by the copper tariffs pushed Comex copper prices to a new historical high, and the price spread between Comex and LME copper continued to widen. On the fundamental side, supply side, copper prices surged sharply in the early session yesterday, with significant fluctuations in suppliers' hedging positions, putting pressure on their willingness to sell, leading to a relatively deadlocked supply side. Demand side, downstream buyers showed weak pricing intentions, with only a small amount of just-in-time procurement maintained. Copper prices fluctuated significantly during the day, and market trading volume noticeably weakened, with overall demand performance being mediocre. Price-wise, copper prices are expected to continue their downward trend today, but the overall downside space is limited.

Aluminum

Last night, the most-traded SHFE aluminum 2505 contract opened at 20,710 yuan/mt, with a high of 20,720 yuan/mt, a low of 20,665 yuan/mt, and closed at 20,675 yuan/mt, down 25 yuan/mt, or 0.12%. Yesterday, LME aluminum opened at $2,612/mt, with a high of $2,628/mt, a low of $2,600.5/mt, and closed at $2,605/mt, down $3/mt, or 0.12%.

Summary: On the macro front, after insiders said Trump was ready to announce auto tariffs as early as this Wednesday local time (now announced a 25% tariff on all imported cars), the US dollar index continued to rise, finally up 0.43%, closing at 104.67, SHFE aluminum night session was weak and fluctuated rangebound. Domestic macro favorable tone remains unchanged, Minister of Finance Lan Fo'an stated that fiscal policy in 2025 should be more proactive, continue to exert force, and be more forceful; the central bank's Q1 meeting suggested increasing the intensity of monetary policy regulation, and cutting RRR and interest rates at an opportune time. The central government is putting up "real money" to vigorously promote consumption, increasing pensions, and issuing childcare subsidies to enhance consumption capacity. Automobile circulation reform and new consumption scenarios (such as NEVs and lightweight trends) directly stimulate aluminum demand growth, especially in automobile manufacturing and aftermarket, significantly bullish for aluminum prices. On the fundamentals side, the aluminum industry chain remains mainly bullish, the "Golden March and Silver April" seasonal destocking trend is further clarified, aluminum ingot inventory has approached the 800,000 mt mark after a sharp drop mid-week; end-use consumption such as NEVs is steadily growing, downstream restocking demand has also warmed up. SMM believes that this week's continued good destocking state and domestic policy support will support short-term prices, if expectations for US Fed interest rate cuts heat up or EU-US trade relations further ease, aluminum prices may continue to fluctuate upward in the short term, but the short-term market is still somewhat suppressed by external bearish factors, whether SHFE aluminum can return to the 21,000 yuan/mt mark still needs to find further upward momentum. Continue to closely monitor changes in macro sentiment and the actual release of downstream demand.

Lead

Overnight, LME lead opened at $2,077/mt, with its overall price center gradually moving upward, largely recovering the losses since the beginning of the week. It attempted to reclaim the $2,100/mt level but failed, reaching a high of $2,094/mt. LME lead eventually closed at $2,088.5/mt, up 0.31%.

Overnight, the most-traded SHFE lead 2505 contract opened at 17,625 yuan/mt. Domestic supply tightness and off-season consumption factors intertwined, leading to a stalemate between bulls and bears after the opening. SHFE lead mostly consolidated between 17,610-17,650 yuan/mt, with short-term supply imbalances relatively prominent. The overall price center of SHFE lead moved higher compared to the previous day. SHFE lead eventually closed at 17,640 yuan/mt, up 0.37%, with open interest increasing by 550 lots to 58,646 lots compared to the previous trading day.

Recently, both supply and demand expectations in the lead market have shown a downward trend. On one hand, maintenance at primary lead smelters has led to a temporary reduction in supply, which has already impacted the current spot market circulation, continuing to support lead prices in an upward fluctuation. Meanwhile, secondary lead production has remained stable with some increases, with robust demand for raw materials such as scrap batteries, driving scrap prices higher and maintaining cost pressures. On the other hand, lead-acid batteries will enter the traditional off-season in April, coupled with high raw material costs for lead and antimony. Some companies are actively controlling inventory, with small and medium-sized enterprises showing signs of production cuts or holidays in the mid-to-late month, putting pressure on subsequent lead ingot destocking.

Zinc

Overnight, Trump announced a 25% tariff on all imported cars, stating that the reciprocal tariff plan would be "lenient." US Fed's Kashkari noted that more work is needed to reduce inflation, and the job market remains strong. US Treasury Secretary Besant mentioned that an economic agreement with Ukraine could be signed next week. The Kremlin stated that Putin's order to suspend energy strikes remains effective. He Lifeng held a video call with US Trade Representative Greer. The president of Bank of China stated that the credit coverage rate of the "Hangzhou Six Dragons" ranks first among all financial institutions.

Overnight, LME zinc opened at $2,966/mt, initially reaching a high of $2,974/mt, then slightly declined below the daily average line before recovering the losses. During the European trading session, longs reduced positions, causing LME zinc to continuously drop to a low of $2,934/mt. However, entering the night session, LME zinc rebounded and fluctuated near the daily average line, eventually closing down at $2,952/mt, a decrease of $16.5/mt, or 0.56%. Trading volume decreased to 70,105 lots, while open interest decreased by 457 lots to 226,000. On March 26, LME zinc inventory decreased by 3,650 mt to 146,575 mt, a drop of 2.43%. Overnight, LME zinc recorded a bearish candle, with the upper Bollinger Band forming resistance and the 20/60-day moving averages providing support. Sources indicated that Trump is prepared to announce the car tariffs as early as this Wednesday local time. The US dollar index rose, suppressing LME zinc's performance.

Overnight, the most-traded SHFE zinc 2505 contract opened at 24,085 yuan/mt. Initially, longs reduced positions, causing SHFE zinc to quickly drop to a low of 24,045 yuan/mt. Subsequently, shorts reduced positions, and SHFE zinc rose above the daily average line, with the center fluctuating around 24,150 yuan/mt, eventually closing at 24,155 yuan/mt, with a % change of 0%. Trading volume decreased to 64,751 lots, while open interest decreased by 1,904 lots to 123,000. Overnight, SHFE zinc recorded a bullish candle, with the upper Bollinger Band forming resistance and the 10/60-day moving averages providing support. Domestic supply is expected to continue to ease, and downstream consumption is anticipated to gradually return to normal. Zinc prices may maintain a fluctuating trend in the short term.

Tin

On March 26, US President Trump issued a statement announcing a 25% tariff on all imported cars. The tariff will take effect on April 2. Trump stated that the car tariff will be permanent. He mentioned that if cars are manufactured in the US, they will not be subject to the tariff. Trump added that if parts are produced in the US but the entire vehicle is not, these parts will not be affected by the tariff. Trump also stated that the US will impose tariffs on lumber and pharmaceuticals. US officials indicated that the tariff is expected to generate over $100 billion in additional annual revenue. The 25% car tariff is imposed on top of the existing tariff, which is generally 2.5%. The Premier of Ontario, Canada, expressed support for retaliatory tariffs against the US; European Commission President von der Leyen expressed regret over the US car tariff and stated that the EU will assess this move and other US actions in the coming days, seeking to resolve the issue through negotiations. During the night session, SHFE tin prices fluctuated upward, with overall market sentiment remaining bullish. The price center stabilized around 280,000 yuan/mt. In the tin ingot spot market, yesterday's trading remained sluggish, with most traders reporting scattered transactions, and a few traders completing around one truckload of deals. Downstream and end-user companies showed low overall purchasing willingness, with weak order demand.

Nickel

SMM reported on March 26 that the spot premiums/discounts for Jinchuan No.1 nickel were in the range of 1,700-1,900 yuan/mt, with an average premium of 1,800 yuan/mt, down 50 yuan/mt from the previous trading day. The premiums/discounts for Russian nickel were in the range of -100 to 100 yuan/mt, at parity, unchanged from the previous trading day. In the futures market, nickel prices fluctuated downward after opening yesterday. As of 11:30, the closing price was 129,530 yuan/mt, up 0.54% from the previous trading day's settlement price, with the lowest price touching 128,530 yuan/mt. In terms of spot premiums/discounts, Jinchuan brand nickel fell 50 yuan from the previous trading day. The night session strengthened yesterday, and today's premiums fell slightly to promote market transactions. From a macro perspective, SHFE nickel futures contracts fluctuated downward after opening in the morning, possibly affected by the recent slowdown in Indonesia's tax policy, but there is still a possibility of a surge, with specific attention to the implementation of Indonesia's new policy. In terms of the price spread with nickel sulphate, today's SMM1# refined nickel price was 129,400-132,350 yuan/mt, with an average price of 130,875 yuan/mt, up 1,025 yuan/mt from the previous trading day's spot price. The spread range was about 2,556 yuan/mt (Ni contained), with nickel sulphate still at a discount to refined nickel.