SMM Morning Comment For SHFE Base Metals On May 8

SHANGHAI, May 8 (SMM) –

Copper

Overnight, LME copper prices opened at $9,953/mt and fell to $9,951.5/mt, but then rose to $10,118/mt before closing at $10,009.5/mt, up 0.96%. Trading volume was 27,000 lots and open interest stood at 334,000 lots. Overnight, the most-traded SHFE 2406 copper contract opened at 80,520 yuan/mt, with its session low and high at 80,420 yuan/mt and 80,890 yuan/mt before closing at 80,760 yuan/mt, up 0.38%. Trading volume was 33,000 lots and open interest stood at 183,000 lots. On the macro level, Federal Reserve officials have been hawkish, saying they will raise interest rates if necessary, but more likely they will maintain current interest rates for a longer period of time. SHFE copper prices were slightly suppressed. Israeli tanks have entered Rafah, and we should keep an eye on whether geopolitical conflicts will escalate in the future. Supply side, as delivery approaches, traders are more inclined to deliver and the number of warehouse receipts has increased. In terms of consumption, downstream purchases recovered slightly but without significant increases amid slightly declining copper prices. New orders remained weak due to high copper prices. The market continues to focus on supply issues. Copper prices are expected to remain high.

Aluminum

Overnight, the most-traded SHFE 2406 aluminum contract opened at 20,600 yuan/mt, with the highest and lowest prices at 20,655 yuan/mt and 20,535 yuan/mt before closing at 20,585 yuan/mt, down 50 yuan/mt or 0.24%. LME aluminum opened at $2,573/mt on Tuesday, with its low and high at $2547/mt and $2,593/mt respectively before closing at $2,568.5/mt, up 0.69%.

Summary: The domestic macro front was intertwined with bullish and bearish factors. Supporting real estate and stimulating consumption still dominated the market. The inventory growth after the holiday was better than expected. The inventory of aluminum ingots and billets in major consumption areas dropped slightly, but high aluminum price suppressed downstream consumption. The inventory of aluminum ingots and aluminum billets declined at a slower pace. In the short term, supply-demand imbalance is not prominent. Low inventory and bullish demand can support aluminum price. It is expected that the aluminum prices may go up.

Lead

On Tuesday, LME lead opened at $2,228/mt, and hit a high of $2,250/mt before closed at $2,227.5/mt, up $25/mt, or 1.13%. The most-traded SHFE 2406 lead contract opened at 17,750 yuan/mt overnight and rose to 17,950 yuan/mt before closing at 17,900 yuan/mt, up 240 yuan/mt or 1.36%.

Zinc

Overnight, LME zinc prices opened at $2,992/mt, and hit a high of $2,975/mt before falling back to $2,945/mt, and closed at $2,943/mt, up $35/mt or 1.2%. The trading volume rose to 12,134 lots, and open interest fell by 1,089 lots to 243,000 lots. LME zinc inventory decreased by 250 mt to 253,725 mt, a drop of 0.1%. With expectations of interest rate cuts by Federal Reserve and a decrease in LME inventories, the macro environment is bullish. However, the strengthening of the US dollar has suppressed the upward trend of LME zinc prices. Therefore, LME zinc prices are expected to fluctuate widely.

Overnight, the most-traded SHFE 2406 zinc contract fell to 23,340 yuan/mt after opening at 23,395 yuan/mt, but then rose to 23,585 yuan/mt before closing at 23,485 yuan/mt, up 210 yuan/mt or 0.9%. Trading volume dropped to 75,267 lots, and open interest decreased by 701 lots to 91,701 lots. The macro sentiment cooled down slightly. The short-term ore supply tightness and declining TC still provided support for zinc prices. However, as the downstream demand has not improved, it is expected that SHFE zinc prices will continue to fluctuate.

Tin

SHFE 2406 tin contract rose sharply and stabilized, closing at 263,270 yuan/mt, up 0.02%.

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 300-1,000 yuan/mt for SHFE 2406 tin contract, versus discounts of 800 yuan/mt to premium of 300 yuan/mt for delivery brands and premiums of 0-300 yuan/mt for Yunxi brand. In yesterday's early trading, SHFE 2405 tin contract moved downwards after opening higher. The overall prices rebounded. Downstream companies buying sentiment declined. Transactions were poor yesterday.

Nickel

On May 7, the most-traded SHFE nickel contract opened at 145,800 yuan/mt, and closed at 144,170 yuan/mt, down 870 yuan/mt compared with the last trading day. Trading volume increased by 99,180 lots to 221,659 lots, and open interest increased by 6,413 lots to 98,178 lots. The most-traded SHFE nickel contract fell sharply in a short period of time in the morning, and then fluctuated at a relatively stable range, with a final decrease of 0.01%.