SMM Morning Comment For SHFE Base Metals (May 29)

SHANGHAI, May 29 (SMM) –
Copper
Overnight, LME copper opened at $9,636.5/mt. It initially rose to a high of $9,645.0/mt, then fluctuated downward. It touched a low of $9,548.0/mt at the end of the session and finally closed at $9,566.0/mt, down 0.31%. Trading volume was 14,383 lots, and open interest was 293,958 lots. Overnight, the SHFE copper 2507 contract opened at 78,010 yuan/mt. The price fluctuated at the beginning of the session, then declined continuously. It reached a high of 78,130 yuan/mt at the start and fell to a low of 77,700 yuan/mt at the end of the session, finally closing at 77,790 yuan/mt, down 0.33%. Trading volume was 26,397 lots, and open interest was 168,556 lots. On the macro side, the US Fed meeting minutes indicated that the risks of rising unemployment and inflation had increased, and the benefits of flexible average inflation targeting in a high-risk environment had diminished. However, the market was optimistic that trade agreements would improve the US economic outlook. Meanwhile, the weakening yen pushed the US dollar index to rise continuously, suppressing copper prices. On the fundamental side, copper prices remained high, and downstream consumption sentiment weakened. No pre-holiday inventory replenishment orders were seen ahead of the Dragon Boat Festival, while imported copper continued to arrive. Overall, the US dollar index surged, suppressing copper prices. However, copper inventories at LME-registered warehouses have fallen to their lowest level in nearly a year. It is expected that copper prices will stop falling and stabilize today.
Aluminum
Futures Market: Overnight, the most-traded SHFE aluminum 2507 contract opened at 20,115 yuan/mt, with a high of 20,135 yuan/mt, a low of 20,045 yuan/mt, and closed at 20,070 yuan/mt, down 25 yuan/mt or 0.12% from the previous close. LME aluminum opened at $2,481/mt yesterday, with a high of $2,495.5/mt, a low of $2,460/mt, and closed at $2,465/mt, down $18/mt or 0.72%.
Summary: On the macro front, the minutes from the US Fed meeting indicated that participants agreed that increased uncertainty about the economic outlook made a cautious monetary policy appropriate. On the fundamentals side, the overall supply side of the aluminum market remained stable in the short term, with no significant changes observed. On the cost side, price fluctuations triggered by earlier disruptions to bauxite supply in Guinea have gradually eased, and the increase in domestic spot alumina prices has significantly slowed down. As alumina enterprises' profit margins improve, some are expected to initiate production resumption plans, which may have some impact on subsequent market supply. On the demand side, domestic seasonal weakness and trade uncertainties are exerting dual pressure. In the short term, the operating rates of aluminum processing enterprises will continue to face downward pressure. It remains to be seen whether downstream export orders can truly improve and offset the expected weakening of domestic demand. Overall, although aluminum inventory is at a relatively low level, providing some support for aluminum prices, the recent lack of unexpected positive factors from a macro perspective makes it difficult to drive aluminum prices higher. Meanwhile, the off-season pressure on the demand side also limits the upside room for aluminum prices to a certain extent. Therefore, it is expected that aluminum prices will maintain a fluctuating rangebound consolidation trend in the short term.
Lead
Overnight, LME lead opened at $1,985.5/mt. The market trading direction remained unclear, and trading activity on the futures market was sluggish. Coupled with the high inventory pressure, LME lead prices were in the doldrums throughout the day, mostly consolidating between $1,975-1,980/mt. Towards the end of the session, influenced by domestic and overseas market movements, LME lead prices quickly recovered from their losses, eventually closing at $1,989/mt, up 0.03%.

Overnight, the most-traded SHFE lead 2507 contract opened at 16,730 yuan/mt. Bulls and bears were locked in a stalemate in early trading, with SHFE lead prices consolidating between 16,725-16,750 yuan/mt for an extended period. Later, as the session neared its close, bears relatively concentrated on reducing their positions, pushing SHFE lead prices to touch 16,800 yuan/mt. Ultimately, SHFE lead closed at 16,780 yuan/mt, up 0.21%, with open interest reaching 47,918 lots, a decrease of 1,103 lots from the previous trading day.
Inventory: As of May 28, LME lead inventory decreased by 1,325 mt to 291,050 mt. Total SHFE lead ingot warrant inventory reached 37,498 mt, an increase of 199 mt from the previous day.
Today's Lead Price Forecast:

As the Dragon Boat Festival holiday approaches, some lead-acid battery enterprises plan to take 1-3 days off. Downstream enterprises' purchasing enthusiasm is weak before the holiday, and the continuous accumulation of lead ingot warrant inventory is dragging lead prices down. With no hope for a price drop in scrap batteries, the losses of secondary lead smelters have widened again, dampening their production and shipping enthusiasm. The price inversion between secondary refined lead and primary lead persists, with the cost support of secondary lead remaining effective. With a mix of bullish and bearish factors, lead prices may continue to consolidate in the short term.
Zinc
Overnight, LME zinc opened at $2,712/mt, hitting the intraday high right at the opening. Subsequently, as bulls reduced their positions, LME zinc fluctuated downward, dipping to a low of $2,673/mt during European trading hours. Later, with insufficient downward momentum, the price center of LME zinc rebounded to hover near the daily average line, eventually closing down at $2,689/mt, down $20/mt or 0.74%. Trading volume decreased to 8,227 lots, while open interest fell by 1,301 lots to 208,000 lots. Overnight, LME zinc recorded a bearish candlestick with no upper shadow. Market pessimism about the US economy eased somewhat, the US dollar strengthened, and non-ferrous metals came under pressure. Consequently, LME zinc fell under pressure, with its price center pulling back.
Overnight, the most-traded SHFE zinc 2507 contract opened at 22,340 yuan/mt. In the early session, SHFE zinc quickly surged to a high of 22,485 yuan/mt. With mixed long and short positions, the price center of SHFE zinc pulled back below the daily average line, dipping to a low of 22,225 yuan/mt at the end of the session. It eventually closed up at 22,235 yuan/mt, up 25 yuan/mt or 0.11%. Trading volume decreased to 65,429 lots, while open interest fell by 1,350 lots to 122,000 lots. Overnight, SHFE zinc recorded a small bearish candlestick. Consumption expectations weakened somewhat, while the surplus expectation for zinc ingots persisted. SHFE zinc was in the doldrums, awaiting more macro guidance. It is expected to continue fluctuating today.
Tin
Futures Market: The most-traded SHFE tin contract (SN2507) remained in the doldrums during the night session, with the price midpoint shifting down to around 256,000 yuan/mt, closing at 256,880 yuan/mt, down 2.05% from the previous trading day.
Fundamentals: (1) Supply-side disruptions: Overall tin ore supply in major producing regions such as Yunnan is tightening, with some smelters potentially halting production for maintenance to address raw material shortages. The market reacted strongly to rumors about production resumption and fee payments in the Wa region yesterday. According to SMM, few enterprises are currently paying fees to obtain mining licenses, with many adopting a wait-and-see attitude. Most major ore traders have not paid management fees. Additionally, inspections at the China-Myanmar border are stringent, and the entry procedures for most large machinery and related mining personnel are complex. The current pace of production resumption in the Wa region is below market expectations. (Bullish ★) (2) Demand side: Some downstream processing enterprises gradually resumed operations after the Labour Day holiday, with some demand for low-priced restocking being released, but high-priced transactions remained sluggish. (Bearish ★)

Spot Market: Spot transactions were brisk yesterday. After a sharp decline in tin prices in the afternoon, some enterprises made purchases at the 260,000 yuan/mt threshold. As prices continued to decline, the purchasing sentiment of downstream and end-user enterprises improved, with many beginning to make just-in-time procurement and small-scale restocking. Traders reported that most back-to-back pricing orders were completed by the afternoon today, with most trading enterprises achieving sales exceeding one truckload, and a few reaching over 100 mt.
Nickel
Spot Market: Yesterday, the SMM 1# refined nickel price was 122,000-124,500 yuan/mt, with an average price of 123,250 yuan/mt, a decrease of 50 yuan/mt from the previous trading day. The mainstream spot premium quotation range for 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. The premiums quotation range for Norilsk nickel was 100-400 yuan/mt, with an average premium of 250 yuan/mt, also unchanged from the previous trading day.
Futures Market: The most-traded SHFE nickel contract (NI2507) opened lower and weakened during the night session yesterday. Prices continued to decline in the morning session, closing at 121,620 yuan/mt by 11:30, down 0.73%. Nickel prices have broken through the previous 123,000 yuan/mt platform and have since closed lower consecutively, with weak support below.
Currently, the macro front has a relatively small impact on nickel prices. Nickel prices are primarily under pressure due to supply surpluses and high inventory levels, with weak cost support below. The market outlook suggests that nickel prices will likely remain in the doldrums.