CITIC Securities Futures: Macro Sentiment Remains Weak, Copper Prices Fluctuate Downward

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Last Friday evening, Shanghai copper main contract gapped down over 1% to 93,210 yuan, while London copper retreated to around 11,800 USD.

Macro outlook is bearish. Over the weekend, Iran launched missiles at US and UK bases, with no signs of easing Middle East tensions. With inflation expectations rising, markets bet that the Federal Reserve will not cut interest rates again this year. Market sentiment remains tense, putting pressure on copper prices.

Fundamentals are neutral. Domestic TC further declined to -67.4 USD, exacerbating conflicts between mining and smelting. Last week, global copper inventories remained high at 1.365 million tons, with domestic copper stocks decreasing by 28,000 tons to about 489,000 tons. LME copper stocks increased by over 30,000 tons to 342,300 tons, and COMEX copper stocks decreased by 2,600 tons to 534,000 tons. Watch whether domestic destocking can drive a global turning point in destocking.

Overall, after a sharp decline earlier, copper prices may have room for technical rebound, but the current reversal lacks clear bullish drivers. Marginal tightening of fundamentals offers limited support, and macro negatives are still present. In the short term, copper prices are likely to fluctuate weakly. Today, Shanghai copper main contract is expected to operate in the range of 92,500-95,000 yuan/ton. Strategy-wise, focus on technical rebounds for short-term trading within a range, and continue to wait for stabilization signals for medium- and long-term positions.

Important Notice

The information in this report is sourced from publicly available data. CITIC Construction Investment Futures strives for accuracy and reliability but makes no guarantees regarding the accuracy or completeness of this information. Trading based on this is at your own risk. This report does not constitute personal investment advice and does not consider individual clients’ specific investment goals, financial situations, or needs. Clients should consider whether any opinions or suggestions in this report are suitable for their particular circumstances. (Yu Luyan / Z0023596, for reference only)

Nickel & Stainless Steel:

On the macro front, ongoing geopolitical tensions continue to raise concerns about rising inflation and recession risks. The Fed’s rate cut expectations have significantly diminished, making the macro outlook relatively bearish. However, current raw material intermediates are somewhat tight, providing some support for nickel prices. Recently, GEM’s smelting plants have temporarily shut down for maintenance due to Indonesia’s Eid al-Fitr holiday, which may tighten MHP supply. Meanwhile, sulfur prices are expected to rise due to Middle East tensions. Indonesia Nickel Industry Forum estimates that HPAL sulfur inventories can last for several weeks to a month, which may keep MHP prices relatively strong. Downstream sentiment remains cautious, with spot nickel transactions subdued and inventories accumulating. Indonesian policies are tightening, and the transition period for RKAB is ending; watch for nickel ore quota releases. Although upstream costs are rising, downstream acceptance of high-priced supplies is limited, leading to weak profit transmission. Short-term nickel iron prices may stabilize. Spot stainless steel trading remains moderate; increased supply may continue to pressure prices, with inventory risks persisting.

Nickel and stainless steel range trading. Shanghai Nickel 2605: 125,000-145,000 yuan/ton. SS2605: 13,500-14,500 yuan/ton.

Important Notice: This information is produced by the research team of the futures company. While efforts are made to ensure accuracy, CITIC Construction Investment Futures makes no guarantees. Trading is at your own risk. This is not personal investment advice and does not consider individual client needs. Clients should assess whether any opinions or suggestions are suitable for their specific situation. (Liu Jiaqí / Z0022848, for reference only)

Polycrystalline Silicon:

Polycrystalline silicon futures prices have broken down, likely falling below the production costs of mainstream companies, reflecting market pessimism about future demand. Downstream operations remain low, and from April 1, export tax rebates for PV and other sectors will be canceled, potentially worsening demand. Meanwhile, silicon material producers face high inventory pressures, with industry-wide stocks approaching six months, nearly four months for silicon producers. As a result, many silicon producers are selling at low prices to clear inventories. Under weak demand and high inventories, some silicon plants may resume production, further depressing market sentiment.

PS2605 is expected to trade between 32,000-45,000 yuan/ton. Currently, it is advisable to wait and see.

Important Notice: This information is produced by the research team of the futures company. While efforts are made to ensure accuracy, CITIC Construction Investment Futures makes no guarantees. Trading is at your own risk. This is not personal investment advice and does not consider individual client needs. Clients should assess whether any opinions or suggestions are suitable for their specific situation. (Liu Jiaqí / Z0022848, for reference only)

Aluminum: Last week, spot prices rose slightly, while futures surged significantly. Domestic new capacity of 1.2 million tons began production, but oversupply is now widely recognized. Therefore, the price battle is not about supply and demand but marginal cost changes. The Guinean government announced a reduction in bauxite exports before early April to support prices and protect small miners. Since all mines in Guinea can remain profitable above $70/ton, $70 is considered a support level. Coupled with rising shipping and energy costs, spot prices are around 2,850 yuan. Consider deploying long positions on dips, and reassess whether shortages will occur after Guinea’s policies are implemented.

Alumina 05 contract range: 2,850-3,150 yuan/ton, mainly buy on dips.

Middle East geopolitical issues have persisted for three weeks, with the Strait of Hormuz still closed. Rising oil prices increase inflation expectations, possibly shifting Fed policy, with markets betting on a rate hike in October. Concerns about high oil prices suppress demand, leading to a decline in non-ferrous metals. Before any escalation of production cuts in the Middle East, aluminum prices have limited rebound momentum. Domestic fundamentals slightly improve, with reduced inventory pressure, but stock accumulation remains. Last week, domestic aluminum downstream processing companies increased weekly operating rates by 1 percentage point to 62.9%. Downstream buying on dips is dominant, and spot trading has slightly improved. Market re-pricing geopolitical risks as normal, so short-term aluminum prices remain weak.

SHFE Aluminum 05 contract: 22,500-24,500 yuan/ton, mainly watch.

Important Notice: This information is produced by the research team of the futures company. While efforts are made to ensure accuracy, CITIC Construction Investment Futures makes no guarantees. Trading is at your own risk. This is not personal investment advice and does not consider individual client needs. Clients should assess whether any opinions or suggestions are suitable for their specific situation. (Wang Xianwei / Z0015983)

Zinc: On Friday night, zinc prices opened high and then declined. Macro-wise, Trump issued an ultimatum for Iran to open the Strait of Hormuz, Iran responded firmly, with potential for further escalation. According to Fed observation tools, no rate cuts are expected this year, and macro sentiment remains poor. Fundamentally, domestic TC diverges significantly; April is expected to remain stable overall. Import mineral supply remains limited; SMM reports TC falling to around $5. Demand from smelters is slightly recovering as some plants plan maintenance in April, but overall reduction is not obvious. Downstream, initial demand has improved slightly, with buying interest rising on low prices. Overall, the fundamentals support prices at low levels, but macro sentiment remains subdued, with support at previous lows. Watch for support levels. SHFE Zinc main contract: 22,000-23,000 yuan/ton.

Lead: On Friday night, lead prices showed a strong oscillation. On the supply side, primary lead concentrate supply slightly improved, TC rebounded, maintaining a backwardation. According to Baichuan Yingfu, Yunnan smelters plan to restart next week; existing producers remain operational, with incremental supply. Recycled lead prices have softened, and after lead prices fell, recycled lead smelting profits further shrank, with smelters operating at low levels. Downstream, lead-acid battery producers are gradually resuming work, with large and medium plants near full capacity. Overall, supply and demand remain weak, and macro guidance suggests lead prices will fluctuate at low levels. Range trading for SHFE lead: 16,000-17,000 yuan/ton.

Risk Warning: This information is produced by the research team of the futures company. While efforts are made to ensure accuracy, CITIC Construction Investment Futures makes no guarantees. Trading is at your own risk. This is not personal investment advice and does not consider individual client needs. Clients should assess whether any opinions or suggestions are suitable for their specific situation. (Wang Xianwei / Z0015983)

Aluminum Alloy: Last Friday night, alloy prices weakened. Macro-wise, Trump’s ultimatum for Iran to open the Strait of Hormuz remains unresolved, with potential for escalation. Fed’s no-rate-cut outlook persists, macro sentiment remains poor. On the supply side, recycled aluminum prices declined, with limited supply changes, but costs may rise further due to taxes, supporting costs. According to Fubao, smelting profits on the 19th were 651.5 yuan/ton, down from previous, with weekly output mainly increasing. Downstream processing remains high, with orders improving week over week; warehouse receipts and social inventories continued to decline. Overall, spot support remains, but macro sentiment suppresses prices at low levels. Range for alloy futures: 22,000-23,500 yuan/ton.

Risk Warning: This information is produced by the research team of the futures company. While efforts are made to ensure accuracy, CITIC Construction Investment Futures makes no guarantees. Trading is at your own risk. This is not personal investment advice and does not consider individual client needs. Clients should assess whether any opinions or suggestions are suitable for their specific situation. (Wang Xianwei / Z0015983)

Precious Metals: Precious metals continue to decline, with gold and silver falling more significantly, mainly due to Iran-related supply chain concerns and liquidity risks. Middle East unrest shows no signs of easing; the US claims to plan to deploy ground troops to seize Iran’s Halek Island, Iran responds strongly, threatening retaliation if infrastructure is further attacked. Energy shortages continue to heighten, supporting a strong dollar trend that suppresses precious metals. Global markets also decline, spreading liquidity fears and driving precious metals lower. Overall, the strong dollar and liquidity concerns resonate, causing precious metals to fall.

In terms of trading, short-term wait-and-see is recommended; consider long positions once the market stabilizes. Shanghai Gold 2604: 950-1,030 yuan/gram. Shanghai Silver 2606: 15,000-18,000 yuan/kilogram. Platinum 2606: 450-510 yuan/gram. Palladium 2606: 320-370 yuan/gram.

Important Notice: This information is produced by the research team of the futures company. While efforts are made to ensure accuracy, CITIC Construction Investment Futures makes no guarantees. Trading is at your own risk. This is not personal investment advice and does not consider individual client needs. Clients should assess whether any opinions or suggestions are suitable for their specific situation. (Wang Yanquing / Z0014569)