SMM Morning Comment For SHFE Base Metals On Mar 15

SHANGHAI, Mar 15(SMM) –

Copper

LME copper prices opened at $8933/mt and closed at $8912/mt last evening, down 0.09%, with the highest of $8976/mt and the lowest of $8835.5/mt. The trading volume was 29,000 lots, and open interest stood at 301,000 lots. SHFE 2405 copper opened at 71600 yuan/mt overnight and fell to 71550 yuan/mt after rising to 72140 yuan/mt, closing at 71870 yuan/mt, up 0.27%. Trading volume was 59,000 lots, and open interest stood at 214,000 lots. On the macro front, the number of initial jobless claims in the United States fell more than expected in the week to March 9, the largest increase since August last year, boosting the dollar and putting pressure on copper prices. In terms of fundamentals, the oversupply structure continues. In terms of consumption, copper prices have soared, but sellers are unwilling to cut prices for shipments. Downstream buyers are purchasing more on demand, and market trading is quiet. On the fundamentals, as of March 14, SMM copper inventories in major Chinese markets increased 25,300 mt from Monday to 389,100 mt, and up 41,300 mt from last Thursday. This is up 220,800 mt from pre-CNY level. On the whole, although there is pressure on copper prices due to the U.S. index, news of China's production cuts is still fermenting. U.S. retail sales in February were weak on a monthly basis and oil prices were rising. Copper prices are expected to remain rangebound at highs before delivery.

Aluminum

Overnight, the most-traded SHFE 2404 aluminum contract opened at 19,150 yuan/mt, with its lowest and highest at 19,135 yuan/mt and 19,205 yuan/mt before closing at 19,195 yuan/mt, up 45 yuan/mt or 0.23%. LME aluminum opened at $2,261/mt yesterday, with its high and low at $2272.5/mt and $2244.5/mt respectively before closing at $2,256/mt, down $6.5/mt or 0.29%.

On the macro level, State Council released favourable policies to boost demand. Attitude towards cutting interest rates swung in Europe and the US, which coupled with the US presidential election, bringing uncertainty to aluminum prices. In the short term, the import window for aluminium ingots closed, and inventory is likely to peak, supporting aluminum prices. We need to pay close attention to recovery in consumption during the peak season and the fluctuation of expectations for overseas interest rate cuts.

Lead

LME lead opened at $2164.5/mt overnight and fell by 0.58% to close at $2153.5/mt with highest at $2170/mt and the lowest point at $2141/mt.

Overnight, the most active SHFE 2404 lead contract opened at 16275 yuan/ton, finally closing at 16295 yuan/ton, a rise of 0.12%.

Zinc

Overnight, LME zinc opened at $2574/mt, hitting a low of $2536/mt, and closed at $2559.5/mt, down $12/mt or 0.47%. Trading volume decreased to 8610 lots, and open interest fell 3008 lots to 231,000 lots. LME zinc inventories decreased by 1725 mt to 266025 mt, a decrease of 0.64%.

The most interest active SHFE 2405 zinc contract prices opened at 21385 yuan/mt and fell 110 yuan/mt or 0.51% to close at 21375 yuan/mt with the high-end of 21415 yuan/mt and the low-end of 21310 yuan/mt. Trading volumes decreased to 34837 lots and open interest grew 2097 lots to 92117 lots.

Tin

SHFE 2404 tin contract dropped slightly and then rebounded, closing at 223,570 yuan/mt, up 0.1%.

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 400-1,300 yuan/mt over SHFE 2404 tin contract, versus discounts of 600 yuan/mt to premiums of 300 yuan/mt for delivery brands, premiums of 200-700 yuan/mt for Yunxi brand, and discounts of 1,500 yuan/mt for imported brand tin ingots. Tin prices rose sharply yesterday, suppressing downstream and terminal companies from purchasing. Few deals were heard among traders.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 141,420 yuan/mt, and closed at 140,280 yuan/mt, down 1,770 yuan/mt. Trading volume rose 36,066 lots, and open interest decreased by 1,621 lots. From a macro perspective, the US non-agricultural employment population increased by 275,000 in February after seasonally adjustment, which was the lowest since November 2023. The US unemployment rate rose to 3.9% in February, the highest level since January 2022. Fed is likely to cut interest rate by 25 basis points in June. From a fundamental perspective, yesterday’s spot market transactions were weak. Given the nickel prices, downstream manufacturers still focused on destocking. The downstream orders did not improve. Nickel prices are likely to move rangebound.