SMM Morning Comment For SHFE Base Metals On May 10

SHANGHAI, May 10 (SMM) –

Copper

LME copper prices opened at $9875/mt and closed at $9950/mt overnight, up 0.48%, with the lowest of $9854.5/mt. Trading volume was 19,000 lots, and open interest stood at 333,000 lots. The most active SHFE 2407 copper contract prices opened at 79940 yuan/mt and finished at 80100 yuan/mt last evening, up 0.21%, with the low-end of 79740 yuan/mt and the high-end of 80190 yuan/mt. Trading volume was 30,000 lots, and open interest stood at 176,000 lots. On the macro level, the number of initial jobless claims in the United States for the week ending May 4 was 231,000, the highest since August 2023. The cooling of the labor market caused the US dollar to fall. Federal Reserve official Daly said that if the labor market continued to deteriorate, interest rate cuts could be considered. Copper prices closed higher overnight. In addition, in terms of the geopolitical situation, the ceasefire negotiations in Gaza broke down again. Both Hamas and Israeli delegations have left Cairo. The leader of the Houthi armed forces said he would respond to Israel's invasion of Rafah, and the conflict re-emerged. In terms of fundamentals, from the supply side, there will be a certain inflow of imported copper due to the improved SHFE/LME price ratio, and the supply will grow. In terms of consumption, copper prices fluctuated higher, which dampened downstream purchasing enthusiasm, and the market maintained on-demand purchasing. Smelters exported and restocked inventories after the Labour Day holiday. As of Thursday May 9, SMM copper inventories in mainstream markets in China decreased by 2,500 tons from Monday to 402,200 tons. On the whole, the cooling of the labor market has led to expectations of a rate cut by the Federal Reserve. Due to the decline of the US dollar, 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 20,675 yuan/mt and 20,560 yuan/mt before closing at 20,655 yuan/mt, up 55 yuan/mt or 0.27%. LME aluminum opened at $2,570/mt in the previous trading day, with its low and high at $2570/mt and $2,577/mt respectively before closing at $2,573/mt, up 0.19%.

Summary: The domestic macro atmosphere was bullish. 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 prices 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 move rangebound.

Lead

LME lead opened at $2235.5/mt and went downward during the Asian trading hours yesterday, declining to $2234/mt. It closed at $2234/mt, up $1/mt or 0.04%.

Last evening, the most active SHFE 2306 lead contract opened at 18065 yuan/mt, reaching a low of 17830 yuan/mt, and closed at 17980 yuan/mt, a drop of 25 yuan/mt or 0.14%.

Zinc

Overnight, LME zinc opened at $2908/mt, hitting a low and high of $2868/mt and $2932/mt respectively, and closed at $2910/mt, up $4/mt or 0.15%. Trading volume decreased to 8501 lots, and open interest fell1206 lots to 238,000 lots. LME zinc inventory dropped by 625 mt or 0.25% to 252125 mt. A weaker US dollar helped non-ferrous metals prices rise. It is expected that LME zinc will consolidate rangebound today.

The most-traded SHFE 2406 zinc contract opened at 23265 yuan/mt overnight and fell to 22915 yuan/mt before rallying to a peak of 23215 yuan/mt. It eventually closed at 23345 yuan/mt, up 140 yuan/mt or 0.6%. Trading volume grew to 73254 lots, and open interest decreased by 3355 lots to 79691 lots. According to SMM research, as of Thursday this week, the total zinc ingot inventory of seven regions in China was 212,900 tons, a decrease of 3,400 tons from May 6. Domestic inventory decreased, and domestic zinc concentrate TCs continued to decline, providing bottom support for zinc prices. On the macro side, the US dollar weakened and was more bullish, and SHFE zinc is expected to fluctuate rangebound.

Tin

SHFE 2406 tin contract rose slightly, closing at 262,180 yuan/mt, up 1.07%.

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 700-1,000 yuan/mt for SHFE 2406 tin contract, versus discounts of 600 yuan/mt to premium of 300 yuan/mt for delivery brands and premiums of 100-500 yuan/mt for Yunxi brand. In yesterday's early trading, SHFE 2406 tin contract remained stable. Downstream companies showed low buying sentiment. Few deals were heard among traders.

Nickel

On May 9, the most-traded SHFE nickel contract opened at 140,460 yuan/mt, and closed at 141,770 yuan/mt, up 580 yuan/mt compared with the last trading day. Trading volume fell by 53,485 lots to 168,181 lots, and open interest decreased by 8,003 lots to 90,022 lots. The most-traded SHFE nickel contract fluctuated at a relatively stable range, with the highest at 142,470 yuan/mt and a final decrease of 0.71%.