SMM Morning Comment For SHFE Base Metals (Mar 31)

SHANGHAI, Mar 31 (SMM) –
Copper
Last Friday night, LME copper opened at $9,794/mt, with the highest price reaching $9,887.0/mt and the lowest price dropping to $9,773.0/mt. The latest price was reported at $9,783.5/mt, down by $63.0, a decrease of 0.64%. The trading volume was 20,138, and the open interest reached 309,324. The overall trend showed an initial fluctuation and rise, followed by a pullback and downward movement, ultimately closing lower. Last Friday night, the SHFE copper 2505 contract opened at 80,660 yuan/mt, with the highest price reaching 81,190 yuan/mt and the lowest price dropping to 80,310 yuan/mt. The latest price was reported at 80,420 yuan/mt, down by 270 yuan, a decrease of 0.33%. The trading volume was 64,252, and the open interest reached 208,816. The overall trend showed an initial rise, followed by a fluctuating downward movement.
Macro-wise, the US plans to announce reciprocal tariffs on countries responsible for most of its trade deficit on April 2, while the already announced 25% auto tariffs will take effect on April 3. The upcoming comprehensive reciprocal tariffs in the US have worsened global economic growth prospects. Meanwhile, the market previously expected the US copper 232 investigation to last until Q3, but the investigation period has been shortened. Under the risk of early tariffs, cross-market arbitrage opportunities have narrowed, putting pressure on copper prices. Fundamentally, copper prices have continued to fall. Although some customers are still waiting for prices below 80,000, downstream orders have significantly increased under the falling copper prices. Spot premiums are expected to slightly recover this week. Overall, as the CSPT meeting and the US announcement of comprehensive reciprocal tariffs approach, although the US dollar index has fallen, market unease has increased. If today's CSPT meeting does not meet market expectations, copper prices may continue to face pressure.
Aluminum
Futures: The most-traded SHFE aluminum 2505 contract opened at 20,590 yuan/mt overnight, with a high of 20,640 yuan/mt and a low of 20,555 yuan/mt, closing at 20,575 yuan/mt, down 35 yuan/mt, or 0.17%. Yesterday, LME aluminum opened at $2,563.5/mt, with a high of $2,570.5/mt and a low of $2,545/mt, closing at $2,550/mt, down $9/mt, or 0.35%.
Summary: On the macro front, the unexpected acceleration in the US core PCE price index has increased uncertainty in the US economic outlook. The US's new round of tariffs is volatile, disturbing the global aluminum market. On the fundamentals side, the aluminum industry chain remains mainly bullish, with the seasonal destocking trend of "Golden March and Silver April" becoming clearer. Aluminum ingot inventories have sharply declined and are approaching the 800,000 mt mark. End-use consumption in sectors such as NEVs is steadily growing, and downstream restocking demand is also recovering. As the peak consumption season approaches, order volumes and operating rates in most sectors have rebounded, coupled with continued destocking of social aluminum ingot inventories, providing bottom support for aluminum prices. However, the short-term market is still somewhat suppressed by external bearish factors, with the US dollar rebounding to high levels, putting pressure on base metals. Attention is focused on the support level of 20,500 yuan/mt for the most-traded SHFE aluminum contract. Continued close monitoring of macro sentiment changes and the actual release of downstream demand is required.
Lead
Overnight, the most-traded SHFE lead contract opened at 17,145 yuan/mt, initially rose to a high of 17,450 yuan/mt before fluctuating downward, touched a low of 17,390 yuan/mt, and then consolidated around 17,400 yuan/mt, finally closing at 17,400 yuan/mt, down 100 yuan/mt, a 0.57% decline. Overnight, LME lead opened at $2,030/mt, fluctuated downward during the Asian session, and continued to fluctuate weakly under pressure against the daily average after entering the European session, lightly touched a low of $2,022/mt, and finally closed at $2,022.5/mt, with a 0% change.
As the previous supply-side tightening benefits have been exhausted, market concerns about the traditional consumption off-season have intensified, and some downstream enterprises plan to take holidays during the Qingming Festival, lead ingot inventory buildup expectations have risen. The high demand for scrap from secondary lead enterprises has made scrap battery prices more likely to rise than fall, and the cost support for secondary lead will continue to play a role. In the spot market, lead futures continued to fluctuate upward, but market sentiment was sluggish, downstream demand was weak against the backdrop of the traditional off-season, lead-acid battery enterprises' destocking was not significant, and spot premiums in various regions have seen slight declines.
Zinc
Last Friday, both the annual and monthly rates of the US core PCE price index for February exceeded market expectations. US Fed's Daly stated that there is a reasonable expectation of two more interest rate cuts in 2025. Trump mentioned that starting a third presidential term is not a joke, and one method is to have Vance take office and then step aside. Foreign media reported that Trump will visit Saudi Arabia for the first time in May. A 7.9-magnitude earthquake occurred in Myanmar. The State Administration for Market Regulation announced that it will legally review the transaction of Changhe Port. The State-owned Assets Supervision and Administration Commission of the State Council stated that it will strategically restructure central state-owned enterprises in the automotive sector. Several banks have raised consumer loan interest rates, generally not lower than 3%.
Last Friday, LME zinc opened at $2,895.0/mt, initially fluctuating around the daily average line, reaching a high of $2,902/mt. Subsequently, longs reduced their positions, and LME zinc declined continuously, rebounding slightly during the night session before continuing to trend downward, closing at the day's low of $2,851.5/mt, down $46.5/mt, a decrease of 1.60%. Trading volume increased to 12,255 lots, while open interest decreased by 2,035 lots to 223,000. Overnight, LME zinc inventory decreased by 2,000 mt to 144,575 mt, a drop of 1.36%. Last Friday, LME zinc recorded a large bearish candle, with the 20-day moving average forming resistance. The US Fed maintained its expectation of two interest rate cuts within the year, but due to the impending implementation of reciprocal tariffs, market concerns about economic prospects led to a broad decline in non-ferrous metals, with LME zinc falling.
Last Friday, the most-traded SHFE zinc 2505 contract opened at 23,730 yuan/mt. Initially, shorts increased their positions, causing SHFE zinc to quickly drop below the daily average line, reaching a low of 23,610 yuan/mt. It then fluctuated around 23,630 yuan/mt, eventually closing at 23,620 yuan/mt, down 150 yuan/mt, a decrease of 0.63%. Trading volume decreased to 73,765 lots, while open interest increased by 4,314 lots to 116,000. Last Friday, SHFE zinc recorded a bearish candle, with the 40-day moving average forming resistance. Driven by the LME, SHFE zinc declined, while TC continued to rise, and domestic zinc ingot supply remained relatively loose. It is expected that SHFE zinc will continue to fluctuate in the short term.

Tin
Recently, the domestic and overseas tin market has shown a fluctuating trend, mainly influenced by macro policies and supply-side disturbances. The US Fed maintained a "moderately restrictive" monetary policy, and the fluctuations in the US dollar index exerted some pressure on non-ferrous metal prices. The escalation of armed conflict in the DRC led to the suspension of operations at Alphamin's Bisie mine, exacerbating the tight global tin ore supply. Meanwhile, the delayed resumption of production in Myanmar further reduced domestic tin ore imports. Additionally, a 7.9-magnitude earthquake in Myanmar over the weekend heightened market panic over tin ore supply. In terms of supply, the operating rates of refined tin smelters in Yunnan and Jiangxi began to pull back, constrained by tight raw material supply, resulting in a generally tight supply-demand pattern. On the demand side, downstream solder companies mainly engaged in just-in-time procurement, with high prices dampening restocking intentions. However, the trade-in policy and high production schedules for home appliances provided potential support for demand. Looking ahead, SHFE tin prices are expected to fluctuate around 280,000-289,000 yuan/mt in the short term. Investors should closely monitor the situation in the DRC, the progress of resumption in Wa State, and macro policy directions, exercising caution to avoid chasing high risks.
Nickel
Last week, nickel prices showed a fluctuating upward trend, with spot prices ranging from 128,600 to 133,300 yuan/mt, while SHFE nickel futures prices (2505 contract) fluctuated between 128,250 and 132,000 yuan/mt. On the macro front, the Indonesian government plans to increase the nickel ore tax rate to 14%-19%, and the market generally expects that the implementation of this policy will increase the costs of nickel ore and nickel pig iron, providing some support to nickel prices in the short term. On the fundamental side, the rainy season in the Philippines is nearing its end, and nickel ore shipments are expected to increase, but current supply remains tight, with prices for medium and high-grade nickel ore showing some softening, while Indonesian nickel ore prices remain stable with a strong trend. Domestic nickel ore supply is tight, leading to weak production drivers at smelters, while Indonesian nickel pig iron production remains stable. In terms of downstream demand, the stainless steel sector overall performed weakly, with some steel mills resuming production after the Chinese New Year, but overall supply is limited, and market recovery is slow, with downstream operating rates and order volumes generally weak, leading to inventory buildup in stainless steel. It is expected that SHFE nickel prices will continue to be influenced by Indonesian tax policies next week, maintaining a fluctuating upward trend.