SMM Morning Comment For SHFE Base Metals On Apr 11

SHANGHAI, Apr 11 (SMM) –

Copper

LME copper prices opened at $9482/mt and closed at $9398/mt overnight, a drop of 0.31%, with the low-end of $9325/mt and the high-end of $9511/mt. The trading volume was 30,000 lots, and open interest stood at 324,000 lots. The most active SHFE 2102 contract prices opened at 76500 yuan/mt and finished at 76350 yuan/mt overnight, with the high-end of 76540 yuan/mt and the low-end of 75700 yuan/mt, up 0.25%. Trading volume was 34,000 lots, and open interest stood at 163,000 lots. On the macro level, U.S. inflation data for March grew beyond expectations across the board, shattering previous expectations of a rate cut and pushing the dollar index sharply up 1.043%. Biden made a rare statement that he still expects to cut interest rates before the end of the year, but the timing of the cut will be delayed by at least one month. The sharp rise in the US dollar lowered copper prices overnight. In terms of fundamentals, from the supply side, there is a certain amount of domestic goods arriving. But as the number of warehouse receipts registered at the Shanghai Futures Exchange continued to increase, the spot supply available may decrease. In terms of consumption, copper prices remained stable above 75,500 yuan/ton. Financial pressure is difficult to eliminate, and consumption is still mainly on demand. The CPI data continued to grow beyond expectations, the expectation of interest rate cut was delayed and the US dollar index rose sharply. It is expected that the copper price will fall slightly under the pressure of the US dollar.

Aluminum

Overnight, the most-traded SHFE 2406 aluminum contract opened at 20,500 yuan/mt, with the highest and lowest prices at 20,520 yuan/mt and 20,220 yuan/mt before closing at 20,420 yuan/mt, down 85 yuan/mt or 0.41%. LME aluminum opened at $2,459.5/mt in the previous trading day, with its high and low at $2,494/mt and $2,437/mt respectively before closing at $2,471/mt, an increase of $12.5/mt or 0.51%.

Summary: On the macro level, the US CPI data for March rose more than expected, and market expectations for the Fed's June rate cut cooled again. The domestic aluminum operating capacity was recovering slowly. Downstream operating rate continued to rise, but high prices may suppress downstream procurement enthusiasm, and spot discounts sustained. Overall, the aluminum prices stayed at highs due to growing expectations of US economic recovery and positive fundamentals, and may swing on a strong note. We need to pay attention to impact of high prices on downstream procurement and aluminium ingot destocking.

Lead

Overnight, LME lead opened at US$2,157.5/ton, reaching a high of US$2,192/ton, setting a nearly five-month high. After the release of the Federal Reserve meeting minutes, the US dollar reversed its trend and rose. LME lead gave up all its gains and finally closed at US$2157.5/ton, down 0.21%.

The most active SHFE 2405 lead opened at 16800 yuan/mt and fell below 16700 yuan/mt at one point, and finally closed at 16750 yuan/mt, up 0.39%. Open interest decreased 7873 lots to 36908 lots. Open interest of the SHFE 2406 lead contract reached 57,704 lots.

Zinc

LME zinc opened at $2711/mt overnight, touching a high and a low of $2795/mt and $2678/mt respectively. LME zinc rallied and closed up $40/mt or 1.48% at $2751/mt. The trading volume decreased to 20369 lots, and open interest lost 2369 lots to 248,000 lots. LME zinc inventory dropped by 1000 or 0.38% to 258925 mt.

The most-traded SHFE 2406 zinc contract opened at 22595 yuan/mt overnight and fell to 22265 yuan/mt before rallying to a peak of 22795 yuan/mt. It eventually settled at 22790 yuan/mt, up 130 yuan/mt or 0.57%. Trading volume reduced to 140,000 mt lots, and open interest gained by 5567 lots to 113,000 lots.

Tin

Overnight, SHFE 2405 tin contract fell to 248,000/mt and closed at 248,100 yuan/mt, up 0.32%.

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 800-2,000 yuan/mt for SHFE 2405 tin contract, versus discounts of 0-800 yuan/mt for delivery brands and premiums of 200-300 yuan/mt for Yunxi brand. Tin prices remained at highs yesterday, leaving downstream companies on the sidelines. Few deals were heard among traders.

Nickel

On Wednesday, the most-traded SHFE nickel contract opened at 138,500 yuan/mt, and closed at 139,680 yuan/mt, up 2,590 yuan/mt compared with the last trading day. Trading volume increased by 50,757 lots to 273,596 lots, and open interest decreased by 4,150 lots to 81,592 lots. The most-traded SHFE nickel contract fluctuated sideways after initial slight drop. In the afternoon, it fell sharply to the lowest at 137,950 yuan/mt, and then rebounded, with the final increase of 1.93%.