SMM Morning Comment For SHFE Base Metals On Apr 22

SHANGHAI, Apr 22 (SMM) –

Copper

LME copper prices opened at $9804/mt and closed at $9874.5/mt last Friday, a rise of 1.35%, with the low-end of $9793.5/mt and the high-end of $9913.5/mt. Trading volume was 34,000 lots, and open interest stood at 335,000 lots. The most active SHFE 2102 contract prices opened at 79700 yuan/mt and closed at 80080 yuan/mt last Friday evening, up 1.39%, with the high-end of 80170 yuan/mt and the low-end of 79450 yuan/mt. Trading volumes stood at 97,000 lots and open interest stood at 213,000 lots. On the macro level, Zhu Hexin, deputy governor of the People's Bank of China, recently stated at a press conference held by the State Information Office that a series of monetary policies implemented earlier this year are gradually taking effect. There is still room for monetary policy in the future. The next step will be to closely observe the policy effects, economic recovery and goal achievement. At the same time, there were many positive remarks during the press conference and the recent World Bank Development Committee and IMFC meetings, which pushed copper prices higher. In addition, concerns about copper supply have increased, and driven by large-scale purchases by funds, SHFE copper has hit a new high since 2006. The increasingly tense geopolitical conflicts have also played a certain role in raising copper prices. In terms of fundamentals, from the supply side, as the export window opens, many domestic smelters have increased their export efforts, which may lead to a certain reduction in supply. In terms of consumption, copper prices hit an 18-year high, and downstream consumption is expected to be suppressed again due to financial pressure. On the whole, copper mines in many places have been reported to have stopped production recently. At the same time, some smelters in the Congo-Zambia region are facing suspension of production due to the hydropower crisis. Supply concerns may ferment again, and copper prices are expected to remain high.

Aluminum

Last Friday night, the most-traded SHFE 2406 aluminum contract opened at 20,380 yuan/mt, with its lowest and highest at 20,380 yuan/mt and 20,560 yuan/mt before closing at 20,475 yuan/mt, up 95 yuan/mt or 0.47%. LME aluminum opened at $2,610/mt in the previous trading day, with its high and low at $2,684/mt and $2,608.5/mt respectively before closing at $2,660.5/mt, up $50.5/mt or 1.93%.

On the macro front, expectations for the Fed to cut interest rates cooled. Risky assets and non-US monetary experienced an increase in volatility. In addition, the situation in Middle East intensified. The UK and the US imposed sanctions on Russian metals again, and Biden called for a 25% tariff on China’s aluminum semis, triggering turbulence in global metals market. The domestic aluminum supply rose further, but downstream demand still needs more stimulation from terminal consumption. The inventory of aluminum billets and aluminum ingots remained high. However, the domestic market may fluctuate at a high level amid global aluminum trade friction.

Lead

Last Friday, LME lead price opened at US$2180/ton and hit a high of US$2222/ton, and finally closed at US$2214/ton, an increase of 1.40%.

The most traded SHFE 2406 lead contract opened at 17400 yuan/mt and rose 1.22% to close at 17450 yuan/mt briefly hitting a high point at 17560 yuan/mt.

Zinc

Last Friday, LME zinc prices opened at $2811.5/mt, hitting a low and high of $2803.5/mt and $2863/mt respectively, and closed at $2851/mt, up $36/mt or 1.28%. Trading volume decreased to 11612 lots, and open interest grew 1030 lots to 240,000 lots. LME zinc inventory decreased by 850 mt or 0.33% to 256200 mt. Overseas economic data are good, market macro sentiment continues, and London zinc has risen again. Pay attention to the annual rate data of the US core PCE price index in March to be released this week.

Last Friday, the most active SHFE 2406 zinc contract opened at 22775 yuan/ton.It touched of 22900 yuan/ton and a low of 22585 yuan/ton, and finally closed up at 22805 yuan/ton, up 200 yuan/ton, or 0.88%. The trading volume decreased to 126,000 lots, and open interest increased by 2837 lots to 123,000 lots. Last Friday, SMM weekly zinc concentrate TC was lowered again. The supply-side shortage logic continued. The expectation of improvement in domestic macro demand remained. Although spot consumption was not strong, SHFE zinc moved at highs.

Tin

SHFE 2405 tin contract went up last Friday night, closing at 280,850 yuan/mt, up 5.64%.

Last Friday, 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 800-1,500 yuan/mt for SHFE 2405 tin contract, versus discounts of 0-1,000 yuan/mt for delivery brands and premiums of 200-400 yuan/mt for Yunxi brand. SHFE 2405 tin contract stayed at highs last Friday, and downstream companies were on the sidelines. Some downstream companies restocked only as needed. Few deals were heard among traders.

Nickel

Nickel prices fluctuated last week, closing at 140,910 yuan/mt on Friday, above 140,000 yuan/mt again. At the beginning of last week, affected by US lower-than-expected inflation data, nickel prices fluctuated downward to the lowest at 133,780 yuan/mt. Later, boosted by macro environment and industrial chain, nickel prices rose. From a macro perspective, due to overseas geopolitical conflicts, funds flowed into the non-ferrous sector with strong liquidity driven by risk aversion sentiment, so non-ferrous metals prices rose overall. Another noteworthy event is that Russian nickel was again sanctioned by the US and Britain, and it influenced the delivery properties of Russian nickel on the LME. Last week saw production resumption after Lebaran holiday in Indonesia. However, since RKAB approval still presented no progress, nickel ore supply uncertainties continued. Concerns about raw material supply have become the focus of attention in the nickel industry chain recently, and nickel prices have also been supported by the industry chain. Fundamentally, domestic inventory fell slightly last week. SMM surveys showed that transactions in the spot market were thin last week due to high nickel prices. Therefore, it is predicted that the export of domestic nickel plates may increase slightly last week. At the same time, overseas inventories continued to drop last week, with warehouses in Asia still being the main force. Demand side, according to SMM research, alloy special steel downstream is expected to usher in the peak season in Q2, providing some support for nickel plate demand in the future. In addition, while terminal profits exist, the downstream may accept a higher nickel price for essential needs. In summary, nickel prices were guided by macro sentiment last week. The upstream supply was not released, while the downstream profits remained relatively stable supported by raw material prices. If raw material supply cannot be released, SHFE nickel prices are expected to rise this week.