SMM Morning Comment For SHFE Base Metals On Apr 17

SHANGHAI, Apr 17 (SMM) –

Copper

LME copper prices opened at $9463/mt and closed with a drop of 0.98% at $9474.5mt last evening the low-end of $9412/mt and the high-end of $9495/mt. Trading volume stood at 27,000 lots. Open interest stood at 334,000 lots.

The most active SHFE 2406 copper contract prices opened at 76460 yuan/mt and finished at 76710 yuan/mt last evening, down 0.51%, with the low-end of 76310 yuan/mt and the high-end of 76740 yuan/mt. Trading volume was 49,000 lots, and open interest stood at 198,000 lots. On the macro level, European Central Bank President Christine Lagarde said that interest rates will be cut soon. ECB board member Villeroy also said that the ECB will cut interest rates as early as June 6. The US dollar index rose, which was bearish for copper prices. In terms of fundamentals, from the supply side, copper prices fluctuated at highs. Many refineries and traders had large amount of inventories, but were unwilling to lower prices sharply. In terms of consumption, high market prices continue to suppress demand. Except for on-demand purchases, most downstream companies are not very motivated to purchase. Spot trading was subdued. In terms of price, Europe and the United States will release a lot of economic data in the near future, and the probability of the US dollar index rising is relatively high. It is expected that there will be limited upward space for copper prices.

Aluminum

Overnight, the most-traded SHFE 2406 aluminum contract opened at 20,185 yuan/mt, with high and low at 20,390 yuan/mt and 20,165 yuan/mt before closing at 20,325 yuan/mt, down 90 yuan/mt or 0.44%. LME aluminum opened at $2,555/mt in the previous trading day, with its high and low at $2,569/mt and $2,517/mt respectively before closing at $2,559.5/mt, up $11/mt or 0.43%.

Summary: On the macro level, the recent strong employment data and high inflation data further delayed the Fed's interest rate cut expectations, the economic growth got off to a good start in the first quarter, and favourable policies such as "trade in" in China have been introduced. Consumption is optimistic. However, the situation in Middle East intensified on weekends. UK and the US imposed greater sanctions on Russian aluminum, triggering turbulence in global metals market. Fundamentally, the supply pressure is limited due to Yunnan's electricity supply and the continued closure of the import window. On the demand, high aluminum price suppressed downstream purchasing enthusiasm and operating rate. The spot discounts sustained, but driven by the destocking expectation of aluminum ingots, the discounts may narrow. Overall, aluminum prices were more influenced by growing expectations of macroeconomic recovery and positive fundamentals, and may swing on a strong note. We need to pay attention to the risk of falling back from highs. High prices on downstream procurement and changes in domestic inventory deserved attention.

Lead

LME lead opened at $2176/mt overnight and fell by 1.15% to close at $2147.5/mt with highest at $2191/mt and the lowest point at $2141/mt.

The most traded SHFE 2406 lead contract opened at 16940 yuan/mt and fell 0.39% to close at 16890 yuan/mt briefly hitting a high point at 17115 yuan/mt and the lowest point at 16855 yuan/mt.

Zinc

Overnight, LME zinc opened at $2777/mt, hitting a low and high of $2707/mt and $2781/mt respectively, and closed at $2758.5/mt, down $16.5/mt or 0.59%. Trading volume decreased to 12853 lots, and open interest decreased 3463 lots to 250,000 lots. LME zinc inventories decreased by 225 mt to 258250 mt, a decrease of 0.09%.

The most interest-traded SHFE 2406 zinc contract opened at 22280 yuan/mt overnight and fell to 22245 yuan/mt before rallying to a peak of 22565 yuan/mt. It eventually settled at 22485 yuan/mt, up 15 yuan/mt or 0.07%. Trading volume decreased to 113,000 lots, and open interest fell by 1206 lots to 122,000 lots. The U.S. real estate-related data were lower than expected, which emotionally dampened the confidence of short sellers. As short sellers left the market, SHFE zinc slightly clawed back the day's decline.

Tin

SHFE 2405 tin contract moved rangbound overnight, closing at 254,020 yuan/mt, down 0.94%.

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 0-1,300 yuan/mt for delivery brands and premiums of 0-400 yuan/mt for Yunxi brand. Tin prices pulled back after an initial rise, and downstream enterprises restocked only as needed. Few deals were heard among traders.

Nickel

On Tuesday, the most-traded SHFE nickel contract opened at 138,250 yuan/mt, and closed at 134,540 yuan/mt, down 4,700 yuan/mt compared with the last trading day. Trading volume fell by 61,178 lots to 279,670 lots, and open interest decreased by 8,552 lots to 57,583 lots. The most-traded SHFE nickel contract fluctuated downward, with the lowest at 134,120 yuan/mt and the final decrease of 2.85%.