SMM Morning Comment For SHFE Base Metals On May 24

SHANGHAI, May 24 (SMM) –

Copper

Overnight, LME copper opened at $10,330/mt, initially dipped to a low of $10,330/mt, then fluctuated upwards, reaching a high of $10,508/mt during the session, before falling back to close at $10,359/mt, with a decline of 0.36%. Trading volume reached 30,000 lots, and open interest reached 348,000 lots. Overnight, the most-traded SHFE copper contract opened at 83,610 yuan/mt, initially peaked at 84,380 yuan/mt, then fluctuated downwards, reaching a low of 83,450 yuan/mt during the session, before closing at 83,620 yuan/mt, with a decline of 0.39%. Trading volume reached 90,000 lots, and open interest reached 210,000 lots. On the macro front, the preliminary S&P Global Composite PMI for the US in May exceeded expectations, rising to 54.4. Both the manufacturing and services PMI preliminary readings were higher than expected. Strong US business activity reduced the urgency for the US Fed to cut interest rates, leading to a rise in the US dollar index, which negatively impacted copper prices. On the fundamentals side, copper prices saw a significant decline yesterday, increasing market activity. According to SMM, although the price drop led to more market transactions, overall trading volume remained relatively low, with many market participants still on the sidelines. As of Thursday, May 23, SMM copper stocks across national mainstream markets increased by 12,300 mt from Monday to 415,100 mt, 296,700 mt higher YoY. In terms of prices, the high US dollar index, together with weak domestic demand, continued to pressure copper prices.

Aluminum

Overnight, the most-traded SHFE 2407 aluminum contract opened at 20,770 yuan/mt, reached a high of 20,960 yuan/mt, a low of 20,770 yuan/mt, and closed at 20,910 yuan/mt, up 130 yuan/mt, an increase of 0.63%. On the previous trading day, LME aluminum opened at $2,638/mt, reached a high of $2,645.5/mt, a low of $2,586.5/mt, and closed at $2,614/mt, down $26.5/mt, a decrease of 1%.

Summary: On the macro front, the US Fed's rate cut expectations have cooled off, and escalating overseas trade frictions are putting pressure on future demand. On the fundamentals, aluminum ingot social inventory increased, and some processing enterprises reported weak follow-up on new orders. In the short term, aluminum prices are expected to continue fluctuating widely at high levels.

Lead

In the overnight session yesterday, the SHFE 2406 tin contract closed at 271,750 yuan/mt, down 1,640 yuan/mt, a decrease of 0.6%, with a high of 274,460 yuan/mt and a low of 270,600 yuan/mt.

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 500-800 yuan/mt over SHFE 2406 tin contract, versus discounts of 300 yuan/mt to premiums of 300 yuan/mt for delivery brands, and premiums of 300-600 yuan/mt for Yunxi brand. Tin prices moved rangebound yesterday, and downstream companies restocked only as needed. Overall, the spot market transactions were relatively poor yesterday.

Zinc

Overnight, LME zinc opened at $3,056.5/mt, initially fell to a low of $3,011/mt, then rebounded, reaching a high of $3,088/mt, and eventually closing down at $3,052.5/mt, down $4.5/mt, or 0.15%. Trading volume decreased to 9,043 lots, and open interest decreased by 5,829 lots to 236,000 lots. LME zinc stocks remained flat at 257,625 mt. The preliminary S&P Global Composite PMI for the US in May exceeded expectations, rising to 54.4. Strong economic data dampened rate cut expectations, slightly weighing on LME zinc.

Overnight, the most-traded SHFE zinc 2407 contract opened at 24,455 yuan/mt. Initially, increased long positions drove SHFE zinc up to a high of 24,710 yuan/mt, then it dipped to a low of 24,450 yuan/mt, eventually closing up at 24,565 yuan/mt, up 90 yuan/mt, or 0.37%. Trading volume decreased to 118,000 lots, and open interest increased by 1,348 lots to 123,000 lots. Recently, TCs in June have entered a concentrated negotiation period, and domestic and imported zinc concentrate TCs may continue to decline. Tight ore supply continues to support zinc prices, with SHFE zinc hovering at high levels.

Tin

In the overnight session yesterday, the SHFE 2406 tin contract closed at 271,750 yuan/mt, down 1,640 yuan/mt, a decrease of 0.6%, with a high of 274,460 yuan/mt and a low of 270,600 yuan/mt.

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 500-800 yuan/mt over SHFE 2406 tin contract, versus discounts of 300 yuan/mt to premiums of 300 yuan/mt for delivery brands, and premiums of 300-600 yuan/mt for Yunxi brand. Tin prices moved rangebound yesterday, and downstream companies restocked only as needed. Overall, the spot market transactions were relatively poor yesterday.

Nickel

On May 23, Jinchuan nickel was at a premium of 1,000-1,200 yuan/mt, with an average of 1,100 yuan/mt, up 400 yuan/mt from the previous trading day. Russian nickel was at a discount of 300 to 600 yuan/mt, with an average of 450 yuan/mt, flat compared to the previous trading day. In the morning, the market experienced a sharp drop along with the non-ferrous metals sector. Although the spot market transactions recovered compared to before, they were still primarily driven by essential procurement. Nickel briquette prices were 149,000-149,800 yuan/mt, down 5,050 yuan/mt from the previous trading day. The price gap between nickel briquette and nickel sulphate was about 2,582 yuan/mt (nickel sulphate prices were 2,582 yuan/mt lower than nickel briquette prices).