CITIC Construction Investment Futures: April 3rd Industrial Products Morning Report

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Copper: Middle East conflict disrupts sentiment; copper prices remain range-bound

Late Thursday, the Shanghai Copper main contract traded in a tight range and finished at 96150 yuan; LME copper was nearly flat around 12360 USD.

Macro is neutral. Trump escalated military actions against Iran, boosting market risk-averse sentiment. At the same time, Iran and Oman have drafted an agreement to collect passage fees for the Strait of Hormuz, raising concerns about inflation stickiness. In addition, Trump adjusted the signed statement and revised the import tariff policy for copper semi-finished products: the tariff rate will be calculated based on the price paid by U.S. consumers. For copper derivative products with a copper content below 15%, the 50% tariff will be removed; otherwise, a 25% tariff will be imposed.

Fundamentals are neutral. Yesterday, SHFE copper warehouse receipts decreased by 7,475 tons to 205.4k tons. LME copper inventory increased by 2,525 tons to 344,400 tons. According to SMM, this week China’s copper social inventory declined by 35.7k tons to 367.4k tons. The operating rate of copper wire and cable companies fell slightly quarter-over-quarter, mainly related to the copper price rebound and weaker acceptance of new orders.

Overall, the Middle East situation’s ups and downs bring uncertainty to demand prospects. Combined with relatively strong fundamental support on the downside, it is expected that in the short term copper prices will remain in a wide-range consolidation. Today, the Shanghai Copper main contract reference range is 95.2k–96.8k yuan/ton. In terms of strategy, it is mainly “stand by” ahead of the holiday.

Important statement

All information in this report comes from publicly available materials. CITIC Futures Co., Ltd. strives to ensure that this information is accurate and reliable, but provides no guarantee regarding the accuracy and completeness of the information. Investing based on this is at your own risk and responsibility. This report does not constitute personal investment advice, and it does not take into account the specific investment objectives, financial conditions, or needs of any particular client. Clients should consider whether any opinions or recommendations in this report are consistent with their specific circumstances. (Yu Luyan/Z0023596, for reference only)

Nickel & stainless steel：

The outlook for geopolitical conflicts is not clear, and market pessimism persists. For now, Indonesia’s policy disruptions are still ongoing. On one hand, the approval progress for Indonesia’s RKAB has been slow, and mineral supply in the future may continue to be tight. On the other hand, Indonesia’s ESDM also plans to adjust the HPM pricing formula, possibly including cobalt in the pricing scope, but as of now there has been no progress. In addition, Indonesia plans to levy nickel export taxes starting April 1, but later said it intends to postpone it. Overall, although expectations for Indonesia’s policies keep changing, the market’s concern about industrial policy remains, which provides support for nickel prices. For pure nickel, spot transaction performance is generally average, but MHP supply is relatively tight. Also, sulfur is affected by the Middle East situation; expectations of tighter supply also support MHP, further supporting nickel prices. For nickel ore, currently Indonesia’s nickel ore remains tight. The market still expects Indonesia’s ore prices to rise. Meanwhile, the rainy season is approaching, which may disrupt mining operations. For stainless steel, spot transaction performance is generally average, but production volumes on the supply side have increased somewhat, causing social inventory to rise slightly.

SHFE nickel 2605 reference range is 128,000–150,000 yuan/ton. SS2605 reference range is 13,500–14,800 yuan/ton. In terms of operations, trade within the range.

Important statement: This information is completed by the research and development analyst team of a futures company. All information in the information comes from publicly available materials. CITIC Futures Co., Ltd. strives to ensure that the information is accurate and reliable, but provides no guarantee regarding the accuracy and completeness of the information. Trading based on this is at your own risk and responsibility. This report does not constitute personal trading advice, and it does not take into account the specific trading objectives, financial conditions, or needs of any particular client. Clients should consider whether any opinions or recommendations in this information are consistent with their specific circumstances. (Liu Qiaqi/Futures Trading Consulting Practicing Information: Z0022848, for reference only)

Polysilicon：

The outlook for geopolitical conflicts is not clear, and market pessimism persists. For now, Indonesia’s policy disruptions are still ongoing. On one hand, the approval progress for Indonesia’s RKAB has been slow, and mineral supply in the future may continue to be tight. On the other hand, Indonesia’s ESDM also plans to adjust the HPM pricing formula, possibly including cobalt in the pricing scope, but as of now there has been no progress. In addition, Indonesia plans to levy nickel export taxes starting April 1, but later said it intends to postpone it. Overall, although expectations for Indonesia’s policies keep changing, the market’s concern about industrial policy remains, which provides support for nickel prices. For pure nickel, spot transaction performance is generally average, but MHP supply is relatively tight. Also, sulfur is affected by the Middle East situation; expectations of tighter supply also support MHP, further supporting nickel prices. For nickel ore, currently Indonesia’s nickel ore remains tight. The market still expects Indonesia’s ore prices to rise. Meanwhile, the rainy season is approaching, which may disrupt mining operations. For stainless steel, spot transaction performance is generally average, but production volumes on the supply side have increased somewhat, causing social inventory to rise slightly.

SHFE nickel 2605 reference range is 128,000–150,000 yuan/ton. SS2605 reference range is 13,500–14,800 yuan/ton. In terms of operations, trade within the range.

Important statement: This information is completed by the research and development analyst team of a futures company. All information in the information comes from publicly available materials. CITIC Futures Co., Ltd. strives to ensure that the information is accurate and reliable, but provides no guarantee regarding the accuracy and completeness of the information. Trading based on this is at your own risk and responsibility. This report does not constitute personal trading advice, and it does not take into account the specific trading objectives, financial conditions, or needs of any particular client. Clients should consider whether any opinions or recommendations in this information are consistent with their specific circumstances. (Liu Qiaqi/Futures Trading Consulting Practicing Information: Z0022848, for reference only)

Aluminum：

Overnight aluminum oxide futures halted the decline; aluminum oxide spot prices held steady. The Iran-U.S. talks are still undecided. Crude oil prices surged sharply again, and freight and energy costs remain at relatively high levels, but the cost increase has not yet clearly transmitted to ore prices. In China, operating capacity remains stable at around 93.75 million tons. Newly added capacity is expected to ramp up and produce at scale in early April. As the screen price weakens, traders are more active in shipping, and overall spot supply will ease somewhat. Downstream aluminum smelters have ample raw material inventories, so they are not buying actively. SHFE stock warehouse receipts continue to rise, and pressure on the board remains. Going forward, watch how Guinea’s April policies land, and whether tighter fuel supply will affect overseas mine production.

Aluminum oxide contract 09 operating range is 2,800–3,100 yuan/ton; build long positions on dips.

Progress in the Iran talks is slow, but a draft agreement for the Hormuz corridor gives the market hope that some crude oil supply will recover, and market risk appetite has improved somewhat. The price trends in oil markets differ between domestic and international markets, while nonferrous metals hold steady. Currently, overseas fundamentals are skewed bullish: Qatar and Bahrain have cut some production; all of the United Arab Emirates’ aluminum companies have cut production. In the Middle East, electrolytic aluminum production cuts involve capacity of 2.63 million tons. However, if the Strait of Hormuz is opened, then in the short term the market may see Middle East stockpiled aluminum ingots flow out due to re-pricing, so LME aluminum’s rally may be weaker than other nonferrous metals. But in the long run, the shortage still exists; therefore, pullbacks should still be seen as a buying opportunity. China’s fundamentals are only average. After the aluminum price rebound this week, traders’ shipping willingness has increased, but downstream sentiment remains cautious, with procurement mainly on a just-needed basis. This week, China’s social inventory of electrolytic aluminum increased slightly by 42k tons. The improvement in consumption is slightly weaker than the same period last year. The continuity of downstream orders is still to be observed.

SHFE aluminum contract 05 operating range is 24,500–25,500 yuan/ton; build long positions on dips.

Important statement

All information in this report comes from publicly available materials. CITIC Futures Co., Ltd. strives to ensure that this information is accurate and reliable, but provides no guarantee regarding the accuracy and completeness of the information. Investing based on this is at your own risk and responsibility. This report does not constitute personal investment advice, and it does not take into account the specific investment objectives, financial conditions, or needs of any particular client. Clients should consider whether any opinions or recommendations in this report are consistent with their specific circumstances. (Wang Xianwei Futures Trading Consulting Practicing Information: Z0015983, for reference only)

Zinc: Overnight Shanghai zinc opened higher then fell. On the macro side, Trump’s remarks are strong, and Brent oil once again touched 110, putting clear pressure on macro sentiment. On the fundamentals side, domestic TC has little room to rise, while import TC has fallen significantly due to transportation issues. Shanghai Metals’ import quotes have been lowered to -2.28. Mining disruptions have reappeared. According to preliminary statistics from Baichuan, April saw refineries in Yunnan and Hunan fully resume operations, with a quarter-over-quarter increment of more than 20k tons. On the demand side, early-stage operations have warmed up slightly; spot performance has been somewhat restrained, and yesterday’s discounts widened. Overall, macro sentiment is under pressure and fundamentals are average; for now, there is no consideration of holding positions through the holiday. In terms of operations, for Shanghai zinc, take-profit on prior longs is the main strategy; the Shanghai zinc main contract operating range is around 23,000–24,000 yuan/ton.

Lead: Overnight Shanghai lead traded in a slightly strong range. In terms of fundamentals: on the supply side, for primary lead, the slightly improved tightness in lead concentrate, while TC remains low. According to Baichuan Yingfu’s survey, refineries in Yunnan still have plans to restart operations; refineries that already resumed will maintain operating status. In addition, there is also some replenishment of imported crude lead, and there is no obvious spot shortage of lead ingots. On the recycling side, scrap battery prices have loosened somewhat, refinery profits remain poor, and smelters maintain low-level operations. On the consumption side, downstream battery companies have resumed operations one after another, and terminal performance is still acceptable; orders at mid and large-sized firms are also decent. Overall, supply and demand remain both weak, and under macro guidance it is expected that lead prices will mainly trade in a low-range consolidation. In terms of operations, trade within the range for Shanghai lead; the main contract operating range is around 16,000–17,000 yuan/ton.

Risk warning: This information is completed by the research and development analyst team of a futures company. All information in the information comes from publicly available materials. CITIC Futures Co., Ltd. strives to ensure that the information is accurate and reliable, but provides no guarantee regarding the accuracy and completeness of the information. Trading based on this is at your own risk and responsibility. This report does not constitute personal trading advice, and it does not take into account the specific trading objectives, financial conditions, or needs of any particular client. Clients should consider whether any opinions or recommendations in this information are consistent with their specific circumstances.

Wang Xianwei Futures Trading Consulting Practicing Information: Z0015983

Aluminum alloy: Overnight alloy traded with weakness in a range. On the macro side, Trump’s remarks are strong, and Brent oil once again touched 110, putting clear pressure on macro sentiment. On the fundamentals side, at the raw material level, holders of scrap aluminum are clearly willing to support prices. According to Fubao’s research, tax and burden costs in East China may increase. On the supply-demand side, weekly production increased slightly quarter-over-quarter, and downstream businesses such as die-casting entered the market for inquiries based on lower prices, with demand orders improving quarter-over-quarter. Overall, it is expected that the alloy will mainly trade in a high-level range; for now, there is no plan to open new positions before the holiday. In terms of operations, take-profit on long positions in aluminum alloy is the main strategy; the main contract operating range is around 23,000–24,000 yuan/ton.

Risk warning: This information is completed by the research and development analyst team of a futures company. All information in the information comes from publicly available materials. CITIC Futures Co., Ltd. strives to ensure that the information is accurate and reliable, but provides no guarantee regarding the accuracy and completeness of the information. Trading based on this is at your own risk and responsibility. This report does not constitute personal trading advice, and it does not take into account the specific trading objectives, financial conditions, or needs of any particular client. Clients should consider whether any opinions or recommendations in this information are consistent with their specific circumstances.

Wang Xianwei Futures Trading Consulting Practicing Information: Z0015983

Precious metals: Precious metals showed a V-shaped move yesterday. Performance diverged across different varieties: gold and silver both closed lower overall, while platinum and palladium rose at the close. This was mainly driven by the possibility that the Iran conflict may last longer. Yesterday, Trump delivered an important speech on the Iran issue, saying that the U.S. would launch 2–3 weeks of severe strikes against Iran and did not provide a clear ceasefire timeline. The market’s concerns about the conflict lasting longer intensified, putting some pressure on precious metal prices. Although Iran claimed it is willing to seek a joint administration mechanism for the Strait of Hormuz with Oman, it still could not significantly ease concerns that the situation would further deteriorate. Overall, the U.S.-Iran situation remains tense. The liquidity risks it brings will put short-term pressure on precious metals, but the strengthening of stagflation risk also provides long-term support for precious metals.

In terms of operations, build long positions on dips. SHFE gold 2606 reference range: 1000–1080 yuan/gram; SHFE silver 2606 reference range: 17,000–19,500 yuan/kilogram; Guang Platinum 2606 reference range: 490–540 yuan/gram; Guang Palladium 2606 reference range: 360–400 yuan/gram.

Important statement

All information in this report comes from publicly available materials. CITIC Futures Co., Ltd. strives to ensure that this information is accurate and reliable, but provides no guarantee regarding the accuracy and completeness of the information. Investing based on this is at your own risk and responsibility. This report does not constitute personal investment advice, and it does not take into account the specific investment objectives, financial conditions, or needs of any particular client. Clients should consider whether any opinions or recommendations in this report are consistent with their specific circumstances. (Wang Yanching/Z0014569)

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