Macro tailwinds drive a 320 yuan recovery in SS2605, while high supply and weak spot demand limit the upside

[Qingming Holiday Impact on Galvanizing Operations]: The operating rates of galvanising producers stood at 57.89% this week, edging down 0.86 percentage points WoW. Raw material side, zinc prices fluctuated at highs throughout the week, with downstream players picking up fewer goods and mainly consuming existing stocks. However, zinc ingots previously priced by galvanising enterprises were delivered successively, and zinc ingot inventory at galvanising enterprises edged down slightly.

SMM April 9 Update: Guangdong region: Premiums in this region bottomed out and rebounded this week. After the holiday, copper prices surged briefly, weakening downstream demand and pushing premiums lower. However, as inventory continued to decline and hit new lows, premiums rose again. As of Thursday, high-quality copper was quoted at 190 yuan/mt, down 10 yuan/mt WoW; standard-quality copper premiums were at 120 yuan/mt, up 10 yuan/mt WoW; and SX-EW copper was quoted at 60 yuan/mt, up 10 yuan/mt WoW. On Thursday, the price spread of standard-quality copper premiums between Shanghai and Guangdong showed Guangdong higher by 130 yuan/mt, with the spread narrowing WoW and no cross-regional cargo transfers occurring. According to SMM statistics, as of Thursday, total inventory in Guangdong warehouses stood at 35,000 mt, down 10,500 mt WoW and down 62,700 mt from the annual high. Warrants totaled 18,800 mt, down 7,600 mt WoW. Specifically: warehouse arrivals this week were 9,900 mt/week, up 1,700 mt/week WoW, far below the annual average (14,000 mt/week). Some suppliers increased shipments to warehouses during the Qingming holiday, which was the main reason for the increase in arrivals. Warehouse withdrawals were 21,000 mt/week, down 3,600 mt/week WoW, but still far above the annual average (14,200 mt/week). Downstream consumption pulled back after the Qingming holiday compared to pre-holiday levels, and we expect it to decline further next week. Looking ahead to next week, neither imported nor domestic sources are expected to see significant increases in arrivals, and supply is expected to remain tight. On the demand side, downstream consumption has shown signs of weakening since mid-week, and consumption is expected to decline further next week. Therefore, supply is expected to remain flat while consumption declines next week, destocking speed will slow down, and upside room for premiums is likely to be limited. (The above information is derived from market research and comprehensive assessment by the SMM research team. The information provided in this article is for reference only. This article does not constitute direct investment research advice. Clients should make prudent decisions and not replace independent judgment with this information. Any decisions made by clients are not related to SMM.)

SMM Morning Meeting Summary: Overnight, LME copper opened at $12,286.5/mt and fluctuated downward in early trading to a low of $12,212/mt. Copper prices then fluctuated upward, with the center moving up to $12,408/mt, before falling back again to finally close at $12,348.5/mt, down 0.99%. Trading volume reached 20,000 lots, and open interest stood at 295,000 lots, an increase of 3,702 lots from the previous trading day. Overnight, the most-traded SHFE copper 2605 contract opened at 95,660 yuan/mt and dipped to 95,300 yuan/mt in early trading. Copper prices then fluctuated upward, with the center moving up to a high of 96,680 yuan/mt, before fluctuating downward to finally close at 96,150 yuan/mt, down 0.08%. Trading volume reached 36,500 lots, and open interest stood at 181,000 lots, a decrease of 1,608 lots from the previous trading day, mainly due to bulls reducing positions.