[Macro Policy and Tug-of-War Between Sellers and Buyers: Aluminum Prices Move Sideways] The risk of supply disruptions to aluminum outside China has not yet subsided, and there remains a supply gap in ex-China aluminum, with the strong LME market transmitting to China and providing support for aluminum prices. However, the continuation of inventory buildup exceeding expectations in China will weigh on domestic aluminum prices. Meanwhile, tightened invoicing regulations may lead to structural tightness in spot cargo, and the weakening spot market further limits the upside room for domestic aluminum prices. Close attention should be paid to the potential turning point in China's social inventory, which could drive a rebound and rise in aluminum prices.

[Tug-of-War Between Longs and Shorts Continued, SHFE and LME Prices Fluctuated Upward] At the beginning of the week, boosted by optimistic sentiment over the easing of earlier geopolitical tensions, LME zinc edged up. Subsequently, as expectations for U.S.-Iran peace talks wavered and the Strait of Hormuz faced renewed restrictions, market concerns intensified, and LME zinc struggled to rise and continued to pull back.

SMM, April 7: The LME market was closed from April 3 to April 6 for Good Friday and the Easter holiday; due to the Qingming Festival holiday, SHFE lead did not conduct night session trading on the evening of Friday, April 3; normal trading resumed from Tuesday, April 7. Supply side, although social inventory of lead ingots in five regions across China continued to decline, maintenance and production resumptions at primary lead smelters proceeded in parallel in April. In addition, secondary lead capacity in northern China increased, finished product inventories at plants increased slightly, and imported lead continued to flow in, leaving spot supply generally ample. Demand side, the lead-acid battery sector entered the traditional off-season, downstream purchase willingness remained cautious, spot transactions were weak, and consumption was absent at stages. Moreover, the risk of post-holiday inventory buildup in social inventory remained high, making resistance in SHFE lead increasingly evident. Lead prices were expected to maintain a fluctuating trend, with limited upside room.

Futures: The LME market was closed from April 3 to April 6 for the Good Friday and Easter holidays; due to the Qingming Festival holiday, SHFE lead did not conduct night session trading on the evening of Friday, April 3; normal trading resumed from Tuesday, April 7. On the Macro Front: 1. Trump said Iran's bridge power plants could be destroyed within four hours. 2. Trump on strait transit fees: the US might as well collect them. 3. Iranian Foreign Ministry spokesperson: the US rescue operation for pilots may have been aimed at stealing enriched uranium. 4. Vessel traffic through the Strait of Hormuz rose to the highest level since early March. 5. China made a major breakthrough in sodium-ion battery technology. 6. Media: Foxconn was trial-producing Apple's foldable-screen phones. Spot Fundamentals: Last Friday, SHFE lead held up well. Suppliers shipped in line with the market, and with the holiday approaching, some suppliers actively made shipments. Premiums for primary lead cargoes self-picked up from production site were lowered, with quotations in major producing areas mostly around parity against the SMM #1 lead average price ex-works, while a small number of regions quoted premiums of 50 yuan/mt. For secondary lead, smelters quoted in line with the market, with secondary refined lead quoted at discounts of 50-0 yuan/mt to premiums of 25 yuan/mt against the SMM #1 lead average price ex-works. However, imported lead continued to flow into China, giving downstream enterprises more choices. Apart from slight stockpiling due to the holiday, other enterprises only purchased as needed. Inventory: As of April 2, LME lead inventory fell by 50 mt to 281,650 mt; SMM social inventory of lead ingot across five regions continued to pull back. Lead Price Forecast for Today: Supply side, although social inventory of lead ingot in five regions in China continued to decline, maintenance and production resumptions at primary lead smelters proceeded in parallel in April. In addition, secondary lead capacity in northern China increased, finished product inventories at plants increased slightly, and imported lead continued to pour in, leaving overall spot supply ample. Demand side, lead-acid batteries entered the traditional off-season, downstream purchase willingness remained cautious, and spot transactions were weak. With phased consumption absent and the risk of post-holiday social inventory buildup elevated, resistance in SHFE lead became more evident. Lead prices are expected to maintain a fluctuating trend, with limited upside room.

At the start of this week, the market still repeatedly traded around the Middle East situation, oil prices, and US Fed expectations. As the Iran conflict continued to escalate, crude oil stayed elevated, the US dollar held up well, and copper prices were overall under pressure. Although the market briefly traded expectations that the US might contain further escalation, lifting risk appetite for a short time, Powell said the current policy stance remained appropriate to “wait and see,” and with the war’s disruption to inflation and growth not yet fading, macro sentiment quickly turned cautious again. Overall, the macro theme changed relatively little this week, with geopolitical risks still pushing up oil prices, heightening inflation concerns, and creating phased pressure on copper prices. Fundamentally, the copper market’s own drivers remained mixed between bullish and bearish factors. China’s manufacturing climate in March remained in expansion territory, providing some support to demand expectations. However, recent trading in the LME market still mostly reflected revisions to earlier shortage expectations. In reality, global visible inventory remained high, restraining the upward momentum of copper prices. Meanwhile, the US adjusted the tariff calculation rules for steel, aluminum, and copper derivatives this week. Although this did not change the 50 tariff framework on copper itself, the policy disruption still affected market sentiment and trade flows. Overall, the copper market remained in a pattern of macro pressure and high inventory, while marginal improvement in China’s demand and the logic of tightness on the mine side remained unchanged. Looking ahead to next week, the macro logic is expected to see no significant change. If the Middle East situation does not materially ease, oil prices and the US dollar will still weigh on copper prices, and short-term resistance will remain. However, support will still persist on the fundamental side, and copper prices are expected to continue to move sideways within a range. LME copper is expected to fluctuate at $12,000-12,500/mt, and SHFE copper at 94,000-97,500 yuan/mt. Spot side, China’s inventory drawdown trend is expected to continue, and premiums are expected to keep rising. Spot prices against the SHFE copper front-month contract are expected to range from a discount of 60 yuan/mt to a premium of 50 yuan/mt.

[SMM Zinc Morning Comment] Overnight, SHFE zinc posted a bullish candlestick with no upper shadow, with support from the 5/10-day daily average below. Driven by the LME market overnight, zinc prices fluctuated upward, but on the fundamentals side, April production at China's domestic smelters is expected to increase by more than 10,000 mt MoM. At elevated zinc prices, downstream enterprises showed lower purchasing enthusiasm, inventory destocking slowed down, and weak domestic fundamentals are expected to limit its upside. Focus on......

[Macro Disturbances Coupled With Rising China Inventory Weighed on the Centers of Both SHFE and LME This Week] At the beginning of the week, Trump stated that the conflict in Iran was basically over, and the US dollar index fell sharply, pushing the center of LME zinc higher; subsequently, market uncertainty intensified, some funds exited, and LME zinc came under pressure......

[SMM Tin Midday Review: The Center of the Most-Traded SHFE Tin Contract Moved Higher; Only a Small Volume of Rigid-Demand Transactions Were Concluded in the Spot Market This Morning]

[SHFE Tin Midday Review: Overseas Mining Bottlenecks Advance, SHFE Tin Contract Retreats from Highs Amid Stable Supply Expectations]

After the Chinese New Year holiday, the first fundamental indicator to watch post-holiday is undoubtedly inventory! SMM compiles the latest inventory data from three markets (LME, COMEX, SHFE) and the evolving logic for the future outlook.