SMM Morning Comment For SHFE Base Metals (May 30)

SHANGHAI, May 30 (SMM) –
Copper
Futures Market: Overnight, LME copper opened at $9,608.0/mt. It fluctuated in the early session, reaching a high of $9,622.0/mt during the oscillation, before pulling back to a low of $9,557.0/mt. It then oscillated and eventually closed at $9,567.0/mt, up 0.01%. Trading volume was 13,343 lots, and open interest was 295,433 lots. Overnight, the SHFE copper 2507 contract opened at 78,080 yuan/mt. It fluctuated in the early session, reaching a high of 78,100 yuan/mt during the session, before fluctuating downward to a low of 77,750 yuan/mt. It eventually closed at 77,850 yuan/mt, down 0.18%. Trading volume was 30,719 lots, and open interest was 171,728 lots.
Price: On the macro front, the US Court of Appeals allowed Trump's tariff policy to remain temporarily in effect, after the US Court of International Trade halted the "Emancipation Day" tariff policy. Officials under Trump expressed strong confidence in winning the lawsuit and believed that even if they lost, they could find alternative ways to impose tariffs. Meanwhile, tariff negotiations would continue, with three agreements expected in the coming weeks. US Treasury Secretary: There has been no change in the attitude of trading partners in the past 48 hours. With an uncertain trade outlook, copper prices fluctuated at highs. On the fundamental front, on the last trading day of May, overall pre-holiday stockpiling was low. It is expected that both supply and demand will be weak today. As of Thursday, May 29, SMM copper inventories in major regions across China decreased by 1,000 mt from Monday to 138,700 mt, continuing to show destocking. In major consumption regions, Shanghai, Guangdong, and Jiangsu all showed destocking, with Shanghai experiencing the largest destocking of 1,100 mt. Overall, with an uncertain trade outlook but optimistic officials under Trump, it is expected that copper prices will fluctuate at highs today, with slight pressure on the upside.
Aluminum
Futures Market: Overnight, the most-traded SHFE aluminum 2507 contract opened at 20,165 yuan/mt, with a high of 20,175 yuan/mt, a low of 20,095 yuan/mt, and closed at 20,110 yuan/mt, down 90 yuan/mt or 0.45% from the previous close. LME aluminum opened at $2,450/mt yesterday, with a high of $2,452/mt, a low of $2,448/mt, and closed at $2,450/mt, down $0.5/mt or 0.02%.
Summary: Domestically, the favorable macroeconomic atmosphere remains unchanged, while overseas macroeconomic uncertainties persist. Fundamentals side, the overall supply side of the short-term aluminum market has remained stable, with no significant changes observed. On the cost side, the price fluctuations caused by earlier supply disruptions of bauxite from Guinea have gradually eased, and the growth rate of domestic spot alumina prices has slowed down significantly. As the profit margins of alumina enterprises have improved, some enterprises are expected to initiate production resumption plans, which may have a certain impact on the subsequent market supply. Despite expectations of weakening demand in some industries during the off-season, the overall decline has been better than anticipated, and demand resilience remains. Overall, the unexpected reduction in domestic aluminum ingot inventory has provided support for aluminum prices and spot premiums. However, due to the recent lack of unexpectedly positive macro factors, it is difficult for aluminum prices to rise further. Meanwhile, the off-season pressure on the demand side has also limited 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
Futures Market:
Overnight, LME lead opened at $1,986/mt. During the Asian session, LME lead maintained a consolidation pattern, basically fluctuating within the range of $1,980-1,990/mt. However, as the European session began, bears gradually increased their positions, causing LME lead to fluctuate downward, reaching a low of $1,958/mt, a new low in nearly a week. The decline slowed down towards the end of the session, with LME lead finally closing at $1,960/mt, down 1.43%.
Overnight, the most-traded SHFE lead 2507 contract opened at 16,700 yuan/mt. In the early session, SHFE lead consolidated slightly around 16,700 yuan/mt. As the decline in LME lead widened, bears increased their positions in the SHFE lead market, leading to a sharp drop in SHFE lead prices. The lowest price reached during the session was 16,570 yuan/mt. The overall center of price movement shifted downward, breaking below the lower boundary of the previous trading platform. SHFE lead finally closed at 16,600 yuan/mt, down 0.93%. Its open interest reached 50,375 lots, an increase of 4,379 lots from the previous trading day.
Today's Lead Price Forecast:
As the traditional Dragon Boat Festival holiday approaches, suppliers are generally eager to sell, and spot transactions are commonly conducted at a discount. The spread between futures and spot prices has widened to around 200 yuan/mt, prompting some traders to transfer inventories to delivery warehouses. As a result, lead ingot inventories in social warehouses have risen, dragging lead prices lower. Meanwhile, some lead-acid battery companies plan to take 1-3 days off during the Dragon Boat Festival, combined with the routine month-end inventory check, with the longest holiday period reaching 5 days. The absence of lead consumption during the holiday will further increase the risk of inventory buildup for lead ingots after the holiday. Additionally, the supply of scrap batteries is tight, and some secondary lead smelters are facing critically low inventories of raw materials. Coupled with losses, attention should be paid to the production dynamics of smelters after the decline in lead prices.
Zinc
Futures Market: Overnight, LME zinc opened at $2,685.5/mt. Initially, LME zinc consolidated along the daily moving average before bulls increased their positions, driving LME zinc higher. It peaked at $2,728/mt during European trading hours. Subsequently, bears increased their positions, causing LME zinc to fluctuate downward throughout the session, bottoming out at $2,669.5/mt before closing at $2,670/mt, down $19/mt or 0.71%. Trading volume increased to 9,466 lots, while open interest rose by 3,084 lots to 211,000 lots. Overnight, the most-traded SHFE zinc 2507 contract opened at 22,450 yuan/mt. Initially, SHFE zinc quickly surged to a high of 22,465 yuan/mt. However, as bulls reduced their positions, the center of SHFE zinc prices pulled back below the daily moving average, bottoming out at 22,300 yuan/mt. It eventually closed at 22,365 yuan/mt, down 130 yuan/mt or 0.58%. Trading volume decreased to 70,875 lots, while open interest fell by 2,972 lots to 116,000 lots.
Zinc Price Forecast: Overnight, LME zinc recorded a long upper shadow bearish candlestick, with the 5/10-day daily average acting as resistance above. Affected by tariff uncertainties, it triggered market concerns, causing LME zinc to trade under pressure, with the center pulling back. Overnight, SHFE zinc recorded a small bearish candlestick. The reduction in domestic inventory still provided support for zinc prices, but tariff uncertainties persisted, coupled with gradually weakening consumption, causing SHFE zinc to trade under pressure. It is expected that SHFE zinc will continue to oscillate today.
Tin
Futures Market: The most-traded SHFE tin contract (SN2507) fluctuated downward during the night session, with the price moving down to around 252,000 yuan/mt and closing at 251,810 yuan/mt, down 2.28% from the previous trading day.
Fundamentals: (1) Supply-side disruptions: The overall supply of tin ore in major producing areas such as Yunnan is tightening, and some smelters may halt production for maintenance to address the shortage of raw materials. The market reacted strongly to rumors about the resumption of production 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 the management fees. Moreover, inspections at the China-Myanmar border are strict, and the entry procedures for most large-scale equipment and relevant mining personnel are complicated. The current progress of production resumption in the Wa region is below market expectations. (Bullish ★) (2) Demand side: After the Labour Day holiday, some downstream processing enterprises gradually resumed work, and there was some release of low-price restocking demand. However, high-price transactions remained sluggish, and long-term spot market transactions were hindered. (Bearish ★★)
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.