SMM Morning Comment For SHFE Base Metals (May 16)

SHANGHAI, May 16 (SMM) –
Copper
Overnight, LME copper opened at $9,527.5/mt. Prices fluctuated at the beginning of the session, dipping to a low of $9,511.0/mt during the session, before fluctuating upward. Prices approached a high of $9,606.0/mt near the close and ultimately closed at $9,600.0/mt, up 0.08%. Trading volume reached 13,902 lots, and open interest stood at 293,706 lots. Overnight, the SHFE copper 2506 contract opened at 78,160 yuan/mt. Prices fluctuated at the beginning of the session, dipping to a low of 78,010 yuan/mt during the session, before gradually rising to a high of 78,610 yuan/mt. It ultimately closed at 78,490 yuan/mt, up 0.13%. Trading volume reached 27,647 lots, and open interest stood at 184,563 lots.
On the macro front, the slower growth in US retail sales in April and the unexpected decline in the monthly PPI rate, coupled with a weaker US dollar index, pushed copper prices higher. Meanwhile, Putin's absence from the Turkey talks and the postponement of the Russia-Ukraine talks to the 16th also influenced the market. Domestically, Premier Li Qiang emphasized the importance of strengthening the domestic economic cycle as a strategic move to ensure steady and sustained economic growth. On the fundamental front, transactions for standard-quality copper against the SHFE copper 2506 contract moved downwards after a higher opening yesterday, closing at a spot premium of 380-410 yuan/mt. SHFE copper futures warrants increased by over 20,000 mt to more than 50,000 mt. As of Thursday, May 15, SMM's copper inventory in major Chinese regions increased by 8,900 mt from Monday to 132,000 mt, and by 11,900 mt from the previous Thursday, ending a 10-week consecutive destocking trend. The significant price spread between futures contracts led to a decline in downstream purchasing interest, with suppliers actively transferring inventory to delivery warehouses being the main reason. It is expected that spot premiums will continue to decline today compared to yesterday. Overall, with the US dollar index weakening again and today being the contract rollover day, copper prices are expected to find some support at the bottom and remain at highs.
Aluminum
On the previous trading day's night session, the most-traded SHFE aluminum 2507 contract opened at 20,150 yuan/mt, with a high of 20,230 yuan/mt, a low of 20,110 yuan/mt, and closed at 20,220 yuan/mt, up 35 yuan/mt or 0.117% from the previous close. LME aluminum opened at $2,519/mt, with a high of $2,524/mt, a low of $2,481/mt, and closed at $2,499/mt, up $23.5/mt or 0.93% (a decrease).
Favorable macro conditions provide a floor for aluminum prices, and low inventory further strengthens price resilience. However, the pressure of the off-season in the demand side limits the upside room. If the US and China make breakthroughs in the 232 steel and aluminum tariff negotiations, the global aluminum trade flow will be reshaped, and the supply pressure in markets outside the US is expected to ease, further boosting market sentiment and being bullish for aluminum prices.
Lead
Overnight, LME lead opened at $1,994/mt. During the Asian session, it dipped to a low of $1,977/mt before fluctuating upward to a high of $2,005/mt. It eventually closed at $2,004.5/mt, up by $12/mt or 0.60%.
Overnight, the most-traded SHFE lead contract opened at 16,990 yuan/mt. It dipped to a low of 16,920 yuan/mt in the early session before fluctuating upward to a high of 16,995 yuan/mt. It eventually closed at 16,990 yuan/mt, down by 10 yuan/mt or 0.06%.

On the macro front, the US dollar slipped after a series of economic data was released in the US on Thursday. Recent remarks by the US Fed indicated that more data was needed to determine the impact of tariff announcements on prices and the economy before adjusting policies.
Inventory: As of May 15, LME lead inventory increased by 400 mt to 250,675 mt. According to SMM, as of May 15, the total social inventory of lead ingots across five locations tracked by SMM reached 56,000 mt, up by 8,500 mt from May 8 and by 8,900 mt from May 12.
On the fundamentals side, the lead-acid battery market is in its traditional off-season in May. Battery inventory accumulated during the Labour Day holiday is difficult to digest quickly, resulting in limited demand for raw lead ingots. As the SHFE lead delivery approaches, suppliers are transferring inventory to delivery warehouses, leading to a simultaneous increase in social warehouse inventory of lead ingots. Additionally, as lead prices rebound, the profitability of secondary lead has improved, prompting some enterprises to plan production resumptions. The expected increase in supply poses a risk of further inventory buildup in social warehouses of lead ingots.
Zinc
Overnight, LME zinc opened at $2,760/mt. During the initial trading session, a tug-of-war between longs and shorts caused LME zinc to oscillate around the daily average line. During the European trading session, bears took the upper hand, pushing the center of LME zinc down to $2,715/mt. Entering the night session, it rebounded back near the daily average line, eventually closing down at $2,726/mt, down $35.5/mt or 1.29%. Trading volume decreased to 12,734 lots, while open interest increased by 1,548 lots to 225,000 lots. Overnight, LME zinc stopped rising and started to fall, with the 60-day moving average acting as resistance above and the 40-day moving average providing support below. The growth rate of US retail sales in April slowed down, and the monthly PPI rate unexpectedly declined, indicating weak economic data. The earlier optimism due to the easing of trade tariffs faded somewhat, providing an opportunity for bears to enter the market, and LME zinc was in the doldrums.
Overnight, the most-traded SHFE zinc 2506 contract opened lower with a gap at 22,490 yuan/mt. After dipping to 22,440 yuan/mt in the initial trading session, bears took profits and exited the market, causing SHFE zinc to rise steadily, with the center moving up to 22,575 yuan/mt. It eventually closed up at 22,595 yuan/mt, up 145 yuan/mt or 0.64%. Trading volume decreased to 57,656 lots, while open interest decreased by 2,645 lots to 96,405 lots. Overnight, SHFE zinc recorded a small bullish candlestick, but the center of the daily candlestick moved down, and the KDJ indicator narrowed. Due to the influx of imported zinc ingots, as well as the impact of high zinc prices and the off-season, downstream buyers were cautious about purchasing at high prices, leading to an accumulation of social inventory. Meanwhile, as some smelters approached the end of their maintenance periods, expectations for an increase in supply rose, causing zinc prices to jump initially and then pull back.
Tin
Futures Market: The most-traded SHFE tin contract (SN2506) opened higher during the night session and then fluctuated at highs, closing at 265,850 yuan/mt, up 0.18% from the previous trading day. Total open interest reached 28,900 lots.
Macro: (1) Li Qiang: Strengthening the domestic circulation should be a strategic move to drive steady and sustained economic growth. (Bullish ★) (2) Ministry of Commerce: China urges the US to cease the Section 232 tariff measures as soon as possible and resolve the concerns of all parties through equal dialogue. (Bullish ★) (3) Ministry of Commerce responds to the US's abuse of export control measures to restrict Huawei's Ascend chips: China will take resolute measures to safeguard the legitimate rights and interests of Chinese enterprises. (Bullish ★) (4) Tariffs - Japan seeks to hold the third round of US-Japan trade negotiations next week. The US is considering revising the US-Japan trade agreement. The EU and the US will accelerate the trade negotiation process, with the EU hoping for greater tariff reductions than the UK. (Neutral) (5) Fed Chairman Powell: The Fed is adjusting its overall policy framework. Zero interest rates are no longer a baseline scenario. There is a need to reconsider the language on underemployment and average inflation. The April PCE is expected to fall to 2.2%. (Bullish ★)
Fundamentals: (1) Supply-side disruptions: Alphamin Resources Corp.'s Bisie tin mine produced 1,290 mt of metal tin from April 15 to May 11, 2025, achieving the expected processing recovery rate. Tin production commenced by processing raw ore stockpiles from the mine, initially from the Mpama North plant, followed by the restart of the Mpama South plant on April 19, 2025. Underground ore blasting and transportation began in the last week of April 2025, while the mine development rate also increased. The first batch of fully documented and approved tin concentrates for export was shipped by truck on May 9, 2025, since the restart of the mine. (Bullish ★) (2) Demand side: After the Labour Day holiday, some downstream processing enterprises gradually resumed operations, and the demand for restocking at lower prices was somewhat released, but high-price transactions remained sluggish. (Bearish ★)