SMM Morning Comment For SHFE Base Metals On Apr 9

SHANGHAI, Apr 9 (SMM) –

Copper

Overnight, LME copper opened at $9,303 /mt, with its highest at $9,481.5/mt and lowest at $9,344/mt before closing at $9,443.5/mt. Trading volume was 38,000 lots, and open interest was 318,000 lots. Overnight, the most-traded SHFE copper contract opened at 76,100 yuan/mt, with its highest at 76,850 yuan/mt and lowest at 75,850 yuan/mt before closing at 76,400 yuan/mt. Trading volume was 77,000 lots, and open interest was 187,000 lots. The Federal Reserve Bank of New York's latest Survey of Consumer Expectations showed on Monday that the US consumers' one-year inflation expectation held steady at 3% in March, bullish for copper prices. At the same time, the maintenance of large domestic smelters in April coincided with the seasonal recovery of consumption. Coupled with the implementation of favorable domestic policies, copper prices rose. Supply side, a certain amount of copper was imported during the Qingming Festival. The surging copper prices led to the subdued downstream purchasing appetite. Only a few of downstream producers restocked amid high prices, and overall consumption remained sluggish. As of April 8, the copper inventory in domestic major trading markets increased by 13,500 mt from Qingming Festival to 401,500 mt, a one-year record. Driven by macro factors and market sentiments, copper prices are expected to have upward room.

Aluminum

Overnight, the most-traded SHFE 2405 aluminum contract opened at 20,250 yuan/mt, with the highest and lowest prices at 20,310 yuan/mt and 20,105 yuan/mt before closing at 20,200 yuan/mt, down 5 yuan/mt or 0.02%. LME aluminum opened at $2,442/mt in the previous trading day, with its high and low at $2,470/mt and $2,426/mt respectively before closing at $2,459.5/mt, an increase of $8.5/mt or 0.35%.

Summary: On the macro front, the dollar fell by 0.15% on Monday, and the market focused on the March inflation data to be released on Wednesday. The domestic aluminum operating capacity was recovering slowly. Downstream operating rate is still expected to rise in April, but high prices may suppress downstream procurement enthusiasm, and spot discounts sustained. Overall, the aluminum prices stayed at highs due to growing expectations of US economic recovery and positive fundamentals, and may swing on a strong note. We need to pay attention to inventory accumulation and weaker-than-expected consumption due to sluggish consumption.

Lead

LME lead opened at $2115/mt overnight and moved between $2100-2120/mt for most of the time. It rose to $2149/mt on sofer US dollar and falling LME lead stocks, and finally closed up 0.42% at $2136/mt.

Overnight, SHFE 2405 lead contract opened at 16550 yuan/mt and followed LME lead up to 16640 yuan/mt, but then fell back due to growing domestic lead ingot stocks. It closed up 0.12% at 16605 yuan/mt. Open interest fell 1221 lots to 48323 lots.

Zinc

LME Zinc opened at $2605/mt overnight, with its session low and high at $2567/mt and $2671/mt before closing up 1.75% at $2668/mt. Trading volume rose to 25603 lots, and open interest fell 979 lots to 251,000 lots. LME zinc inventory decreased by 75 mt to 260125 mt. Macro sentiment is relatively bullish, but expectations for a rate cut by the Federal Reserve have weakened, which may pressure LME zinc today. Overnight, the SHFE-traded SHFE 2405 zinc contract opened at 21945 yuan/mt, with high and low at 21980 yuan/mt and 21735 yuan/mt before closing at 21885 yuan/mt, up 160 yuan/mt or 0.74%. The trading volume fell to 62058 lots, and open interest decreased by 1670 lots to 80144 lots. Affected by the macro-optimistic sentiment and the continued tight supply of zinc ore, SHFE zinc prices rose. As inventories increased slightly, it is expected that SHFE zinc will fall back today.

Tin

Overnight, SHFE 2405 tin contract moved up after opening higher, and continued to move sideways at highs before closing at 238,670 yuan/mt, up 2.12%.

Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as below. Small brand tin ingots were offered at discounts of 800-1,500 yuan/mt for SHFE 2405 tin contract, versus discounts of 100-800 yuan/mt for delivery brands and premiums of 0-300 yuan/mt for Yunxi brand. Overnight, SHFE tin moved up after opening higher, leaving downstream companies on the sidelines. Few deals were heard among traders.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 135,870 yuan/mt, and closed at 136,620 yuan/mt, up 3,170 yuan/mt compared with the last trading day. Trading volume fell by 60,071 lots to 189,887 lots, and open interest decreased by 2,407 lots to 90,380 lots. The most-traded SHFE nickel contract opened slightly lower, rebounded to the highest at 137,540 yuan/mt and then inched lower, with the final increase of 2.2%.