The Market Digested the Tariff Impact, and the Decline in Nonferrous Metals Paused Today [Institutional Commentary]

【Copper】

On Tuesday, SHFE copper fluctuated rangebound at 73,000 yuan/mt intraday, with a significantly high weighted trading volume. Today, spot copper prices were adjusted down to 73,545 yuan/mt, and spot premiums in Shanghai narrowed to 120 yuan/mt. The backwardation structure between near-month contracts remained stable. SHFE copper has strong fundamental support, but the market is highly focused on the implementation of reciprocal tariffs by the US, creating systemic pressure for further declines in SHFE copper. LME copper is expected to maintain wide fluctuations. The SHFE copper index is likely to fall towards 71,000 yuan/mt in the short term and fill the gap. Short positions are recommended.

【Aluminum & Alumina】

Today, SHFE aluminum fluctuated rangebound, with spot premiums in east China at 40 yuan/mt and discounts in south China at 45 yuan/mt. In the short term, macro factors dominated the decline in commodities, putting pressure on non-ferrous metals. The fundamentals of the aluminum market are currently performing well, with social inventories of aluminum ingots and billets decreasing by 26,000 mt and 13,000 mt respectively over the past week. Total inventory is already at a low level compared to the same period in recent years, and apparent consumption exceeded expectations. SHFE aluminum has some resistance to declines, but after breaking downward, it faces resistance at the 20,000 yuan/mt integer level and the annual moving average, while testing support at the 19,000 yuan/mt limit-down level from Monday. Ore prices are in a downward trend, and it is reported that most miners have adjusted long-term contract prices to varying degrees in Q2. The expectation of cost declines and the monthly average price still being profitable have allowed high-cost alumina producers in the north to maintain operations, but they will gradually face cash loss pressure. Before triggering larger-scale substantive production cuts, the weakness in alumina is unlikely to change.

【Zinc】

SHFE zinc fell with reduced positions, with weighted open interest decreasing by 10,000 lots to 223,900 lots, while total settled funds remained at 4.463 billion yuan. The futures market weakened, and downstream buyers still purchased on dips, but overall trading activity weakened. SMM 0# zinc quotations against near-month futures rose to premiums of 95 yuan/mt, and the 0-2 price spread recorded 275 yuan/mt, reflecting market concerns about off-season consumption. The new US president threatened to impose an additional 50% tariff on Chinese exports to the US if China does not cancel the new reciprocal tariffs. Market trading logic is gradually shifting from increased ore production to weakening demand, and it is possible that insufficient consumption could transmit upstream, exacerbating the zinc surplus and pushing SHFE zinc to open up space below 21,500 yuan/mt. Short positions are recommended on rebounds.

【Lead】

The market continues to digest the impact of tariffs, with lead consumption prospects under pressure. SHFE lead fluctuated downward, with SMM 1# lead quotations against near-month futures shifting from discounts to premiums of 5 yuan/mt, and the price difference between primary metal and scrap returning to zero. As lead prices pulled back, the focus is mainly on cost support. Currently, the US is the second-largest importer of lead concentrates to China, and high tariffs will increase the overall cost of imported ore. However, the SHFE/LME price ratio has recently risen, opening the import window, and there is a strong expectation of overseas crude lead replenishment. LME lead broke down, further dragging down the domestic market. In Q2, fluctuations in the lead cost line may intensify, and the possibility of SHFE lead testing the 16,000 yuan/mt integer level increases.

【Nickel & Stainless Steel】

SHFE nickel consolidated at low levels, with mediocre market trading activity. Jinchuan premiums rebounded to 2,900 yuan/mt, while Russian nickel premiums were at 200 yuan/mt and electrodeposited nickel premiums at 150 yuan/mt. High-grade NPI prices pulled back, and Indonesian ore continued to influence raw material pricing, with the latest quotation at 1,024 yuan/mtu, down 10 yuan/mtu week-on-week. In terms of inventory, NPI inventory decreased by 2,500 mt to 20,000 mt, refined nickel inventory decreased by 1,400 mt to 46,000 mt, and stainless steel inventory decreased by 1,000 mt to 980,000 mt. Technically, SHFE nickel is in a downward trend, and short positions are recommended.

【Tin】

SHFE tin struggled to rebound intraday, with the most-traded 2505 contract unable to hold above 270,000 yuan/mt. Domestic spot tin was quoted at 270,000 yuan/mt, with real-time premiums of 2,040 yuan/mt against the delivery month. The tin market continued to reduce positions, with strong technical support at the 258,000-263,000 yuan/mt level. Substantial tightness in tin resource supply is unlikely to ease in April. Tin prices are expected to fluctuate, and the trend direction still depends on supply-side developments.