SMM Morning Comment For SHFE Base Metals On Mar 28

SHANGHAI, Mar 28(SMM) –

Copper

LME copper prices opened at $8858/mt and closed at $8867.5/mt overnight, up 0.05%, with the highest of $8880/mt and the lowest of $8776/mt. Trading volume was 20,000 lots, and open interest stood at 310,000 lots. The most active SHFE 2405 copper contract prices opened at 71840 yuan/mt and finished at 72080 yuan/mt overnight, with the high-end of 72120 yuan/mt and the low-end of 71640 yuan/mt, up 0.01%. Trading volume was 34,000 lots, and open interest stood at 188,000 lots. On the macro front, Fed Governor Waller said that the stickiness of inflation indicated that there was no need to rush to cut interest rates. The US dollar fluctuated in a range at the beginning of the session. At the same time, the smelters will hold a quarterly meeting on the 28th, which may boost macro sentiments, and copper prices closed slightly higher. In terms of fundamentals, from the supply side, traders have a need to withdraw funds near the end of the month. Some supply of goods was delivered to warehouses. At the same time, the volume of arrivals decreased to a certain extent. In terms of consumption, copper prices and premiums have both declined, but end-use consumption continues to be weak and there are also financial constraints. Downstream replenishment is still weak. Overall supply and demand have weakened. Taken together, the yen once fell to its lowest level in 34 years, pushing the U.S. dollar sharply higher. The Bank of Japan has yet to take practical measures to respond. The U.S. dollar may remain high. It is expected that there will be pressure on copper prices.

Aluminum

Overnight, the most-traded SHFE 2405 aluminum contract opened at 19,380 yuan/mt, with its lowest and highest at 19,355 yuan/mt and 19,450 yuan/mt before closing at 19,440 yuan/mt, up 25 yuan/mt or 0.13%. LME aluminum opened at $2,303/mt in the previous trading day, with its high and low at $2,309.5/mt and $2,276/mt respectively before closing at $2,303/mt, up $3/mt or 0.13%.

Summary: On the macro front, there were growing expectations of an interest rate cut by the European Central Bank, and the increasingly tense situation between Russia and Ukraine lifted the commodity market. Fundamentally, there are expectations for an increase in production in May, but the drought situation in Yunnan may bring uncertainty. The arrival of the traditional peak season and the continuous efforts of policies to drive demand boosted the operating rates of various processing sectors. Boosted by positive fundamentals and macro front, aluminum prices may swing on a strong note.

Lead

LME lead opened at $2018.5/mt overnight and fell by 0.64% to close at $2003/mt with highest at $2022.5/mt and the lowest point at $2001/mt.

The most active 2405 lead contract prices opened at 16185 yuan/mt last night with the high-end of 16315 yuan/mt, and closed at 16295 yuan/mt, an increase of 0.77%.

Zinc

Federal Reserve policy indicator: No rush to cut interest rates now! The death toll from the terrorist attack on the Moscow State Concert Hall rose to 140; the Japanese yen once devalued to its lowest level since 1990! S&P confirms the "AA+/A-1+" sovereign credit rating of the United States; India's gold imports in March are expected to drop by more than 90% month-on-month; President Xi Jinping: The common interests of China and the United States have not been reduced, but are more; the total profits of large-scale industrial enterprises across China increased by 10.2% year-on-year; Beijing has lifted the restriction on house purchase within three years of divorce.

Overnight, LME zinc opened at $2444.5/mt, hitting a low and high of $2409/mt and $2450/mt respectively, and closed at $2447.5/mt, up $7.5/mt or 0.31%. Trading volume grew to 12498 lots, and open interest grew 4431 lots to 237,000 lots. LME zinc inventory decreased by 2450 mt or 0.92% to 263550 mt. Federal Reserve officials issued hawkish remarks, which once again hit expectations of interest rate cuts due to sticky inflation. Subsequently, market sentiment recovered.

The most-traded SHFE 2405 zinc contract opened at 20730 yuan/mt overnight and fell to 20680 yuan/mt before rallying to a peak of 20840 yuan/mt. It eventually settled at 20840 yuan/mt, down 10 yuan/mt or 0.05%. Trading volume reduced to 48205 lots, and open interest gained by 402 lots to 97443 lots. The recent macro sentiment has been poor, and the fundamental pattern of weak supply and weak demand has not changed. However, the shortage of ore has provided support to zinc prices.

Tin

SHFE 2404 tin contract remained stable, closing at 223,440 yuan/mt, up 0.19%.

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 600-700 yuan/mt over SHFE 2404 tin contract, versus discounts of 600 yuan/mt to premiums of 200 yuan/mt for delivery brands, premiums of 400-500 yuan/mt for Yunxi brand, and discounts of 1,400 yuan/mt for imported brand tin ingots. Tin price fell slightly yesterday, while some downstream enterprises showed little buying interest as they had purchased.

Nickel

Overnight, the most-traded SHFE nickel contract opened at 131,430 yuan/mt, and closed at 129,510 yuan/mt, down 2,270 yuan/mt. Trading volume rose 53,830 lots, and open interest decreased by 1,249 lots. From a macro perspective, the US Fed has kept the upper limit of its interest rate at 5.5%. The Fed once again maintained interest rates unchanged. Powell's speech has not disclosed when to cut interest rate. This interest rate decision will have little impact on the market. Fundamentally, the progress of nickel ore approval accelerated and production of intermediate product projects in Indonesia ramped up. The market's expectations for tight supply of raw materials began to weaken. On the other hand, affected by the sharp drop in nickel prices, transactions in the spot market picked up, and downstream purchasing sentiment recovered. Nickel price is expected to go down.