SMM Morning Comment For SHFE Base Metals (May 28)

SHANGHAI, May 28 (SMM) –
Copper
Overnight, LME copper opened at $9,583.0/mt, touching a low of $9,571.0/mt at the beginning of the session. It then rose steadily, reaching a high of $9,640.0/mt during the session, before fluctuating downward overall and eventually closing at $9,596.0/mt, down 0.19%. Trading volume was 15,828 lots, and open interest was 289,893 lots. Overnight, the most-traded SHFE copper 2507 contract opened at 78,160 yuan/mt, with prices fluctuating at the beginning of the session. It reached a high of 78,240 yuan/mt and a low of 78,020 yuan/mt during the session, fluctuating overall before eventually closing at 78,100 yuan/mt, up 0.14%. Trading volume was 27,541 lots, and open interest was 164,859 lots. On the macro side, US consumer confidence in May was significantly better than economists' expectations. Bolstered by improved US consumer confidence, the US dollar index strengthened, putting pressure on overnight copper prices. Trump expressed great satisfaction with imposing a 50% tariff on the EU, and the EU has called for the negotiation date to be set as soon as possible. The uncertainty surrounding tariffs also weighed on copper prices. On the fundamental side, imported copper continued to arrive, while downstream purchase sentiment was poor recently, putting pressure on premiums. It is expected that there will still be imported copper shipments today. Overall, with the uncertain tariff outlook and the US dollar index rising again, it is expected that there will be certain pressure on copper prices today.
Aluminum
Futures Market: Overnight, the most-traded SHFE aluminum 2507 contract opened at 20,165 yuan/mt, with a high of 20,205 yuan/mt, a low of 20,130 yuan/mt, and closed at 20,180 yuan/mt, up 140 yuan/mt or 0.70% from the previous close. LME aluminum opened at $2,465.5/mt yesterday, with a high of $2,488.5/mt, a low of $2,442.5/mt, and closed at $2,483/mt, up $17/mt or 0.69%.
Summary: On the macro front, US consumer confidence in May was significantly better than economists' expectations, leading to a further increase in the US dollar index. Fundamentals side, short-term supply shows little change; cost side, the specific impact of the Guinea incident on local bauxite supply remains to be assessed, potentially providing sentiment-driven cost support for alumina in the near term. Demand side faces dual pressures from domestic seasonal weakness and trade uncertainties, with short-term operating rates at aluminum processing enterprises expected to remain under pressure. Subsequent focus will be on whether downstream export orders can genuinely improve and offset the anticipated weakening in domestic demand. Overall, current low inventory provides support for aluminum prices, but recent macro conditions lack unexpected positive catalysts to further drive prices, while off-season demand-side pressures limit upside room. Short-term aluminum prices are likely to fluctuate rangebound, with attention on domestic and overseas demand performance, month-end inventory trends in May, and bauxite supply disruptions.
Lead
Overnight, LME lead opened at $1,987/mt. Trading in the LME lead market was sluggish during the Asian session, with prices consolidating mainly between $1,980-1,985/mt. As the market entered the European session, the US dollar strengthened amid volatility, causing LME lead prices to reverse and pull back. Coupled with the gradual increase in lead ingot inventory, LME lead prices gradually moved towards $1,970/mt. By the end of the session, LME lead prices partially recovered some of their losses, eventually closing at $1,988.5/mt, down 0.28%.

Overnight, the most-traded SHFE lead 2507 contract opened at 16,790 yuan/mt. With the gradual increase in lead ingot warrant inventory on a daily basis, the center of SHFE lead prices shifted further downward. However, prices of raw materials such as scrap batteries rose instead of falling, leading to a mix of bullish and bearish factors. During the latter part of the trading session, SHFE lead prices consolidated within a narrow range of 16,750-16,775 yuan/mt for an extended period. Eventually, SHFE lead closed at 16,765 yuan/mt, down 0.15%, with open interest reaching 47,205 lots, an increase of 1,141 lots from the previous trading day.
Inventory: As of May 26, LME lead inventory decreased by 1,650 mt to 292,375 mt. The total SHFE lead ingot warrant inventory reached 37,299 mt, an increase of 2,015 mt from the previous day.
Today's Lead Price Forecast:

In recent days, lead ingot inventory has gradually increased both domestically and overseas. In particular, with the commissioning of new capacity by secondary lead enterprises in the domestic market, supply has shown a steady upward trend. On the one hand, the increase in supply may raise the risk of lead ingot inventory buildup. On the other hand, the rising demand for scrap and other raw materials by smelters has kept raw material costs high. In addition, the off-season trend in the lead-acid battery market remains unchanged, with downstream enterprises generally experiencing production cuts. Coupled with the approaching Dragon Boat Festival holiday, some enterprises have plans to take time off, dragging down short-term lead consumption. It is expected that lead prices will be in the doldrums.
Zinc
Futures Market: Overnight, LME zinc opened at $2,730/mt. In the early session, LME zinc briefly rose, hitting a high of $2,738.5/mt. Subsequently, bulls reduced their positions, causing LME zinc to dive. It touched a low of $2,683/mt during European trading hours before its center shifted to oscillate near the daily average line. It eventually closed down at $2,709/mt, down $3/mt or 0.16%. Trading volume increased to 9,583 lots, while open interest decreased by 887 lots to 210,000 lots. Overnight, the most-traded SHFE zinc 2507 contract opened at 22,380 yuan/mt. In the early session, SHFE zinc quickly rose, hitting a high of 22,485 yuan/mt. With mixed long and short positions, the center of SHFE zinc fell back near the daily average line, touching a low of 22,355 yuan/mt during the session. It eventually closed up at 22,410 yuan/mt, up 80 yuan/mt or 0.36%. Trading volume decreased to 66,848 lots, while open interest decreased by 216 lots to 121,000 lots.
Social Inventory: On May 27, LME zinc inventory decreased by 2,350 mt to 151,150 mt, a decline of 1.53%. According to SMM communications, as of Monday (May 26), the total zinc ingot inventory across seven locations tracked by SMM was 78,800 mt, a decrease of 5,000 mt from May 19 and 1,600 mt from May 22, indicating a decline in domestic inventory.

Zinc Price Forecast: Overnight, the LME zinc contract recorded a long lower shadow and a large bearish candlestick. Pressured by the strengthening of the US dollar and the uncertainty surrounding the US tariff outlook, non-ferrous metals generally declined, with LME zinc also falling and its price center pulling back. Overnight, the SHFE zinc contract recorded a small bullish candlestick. From a fundamental perspective, the market had largely absorbed the news of an extended maintenance period at a smelter in South China. However, consumption remained resilient, and SHFE zinc mainly consolidated. It is expected to continue oscillating today.
Tin
Futures Market: The most-traded SHFE tin contract (SN2507) remained in the doldrums during the night session, with the price midpoint dropping slightly to around 264,000 yuan/mt, down 0.41% from the previous trading day.
Fundamentals: (1) Supply-side Disruptions: Overall tin ore supply in major producing regions such as Yunnan has tightened. Subsequently, some smelters may halt production for maintenance to address the shortage of raw materials. (Bullish ★) (2) Demand Side: After the Labour Day holiday, some downstream processing enterprises have gradually resumed operations, and there has been some release of restocking demand at lower prices. However, transactions at higher prices remain sluggish. (Bearish ★)

Spot Market: Trading in the spot market remained sluggish yesterday, primarily due to high prices suppressing demand, weak terminal orders, and a wait-and-see sentiment in the market. Traders' shipments were generally low, with most transactions conducted at forward pricing.

Nickel
Spot Market: Yesterday, the SMM #1 refined nickel price was 122,150-124,450 yuan/mt, with an average price of 123,300 yuan/mt, down 850 yuan/mt from the previous trading day. The quotation range for spot premiums of Jinchuan #1 refined nickel was 2,100-2,300 yuan/mt, with an average premium of 2,200 yuan/mt, unchanged from the previous trading day.
Futures Market: The most-traded SHFE nickel contract (NI2507) fluctuated downward yesterday, with early morning prices continuously declining, hitting a low of 122,150 yuan/mt, before rebounding slightly. As of 11:30, the closing price was 122,550 yuan/mt, down 0.38%. In terms of inventory, as of May 23, LME nickel inventory decreased by 2,274 mt to 198,636 mt on a daily basis, while SMM refined nickel social inventory across six locations decreased by 1,762 mt WoW to 42,389 mt, both showing destocking.
In the short term, nickel prices are subject to a dual tug-of-war between cost support and supply surplus, and are expected to remain in the doldrums within the range of 121,000-127,000 yuan/mt. On the macro side, attention should still be paid to the impact of uncertainties surrounding Trump's tariff policies on the market. The marginal effect of the China-US tariff reduction agreement has weakened, and the US threat to impose a 50% tariff on the EU will trigger market risk aversion sentiment.