This week, ferrous metals were in the doldrums. The main logic during the week remained weakening cost support. On Tuesday, Iran proposed charging transit fees for the Strait of Hormuz, while Trump made conciliatory remarks, saying that “even if the Strait of Hormuz remained largely closed, he would still be willing to end military action against Iran.” Market expectations for tighter crude oil supply weakened, and declines in the energy sector dragged down the coal sector, weakening the cost-side logic. During the week, inventories of the five major steel products continued to decline, but apparent demand remained at a low level for the same period in previous years, providing limited fundamental-driven momentum to futures. In the spot market, purchasing interest was average, mainly focused on restocking at low prices. Spot prices were relatively firm, and the spot-futures price spread widened somewhat......

SMM News, April 3: The most-traded SHFE lead 2605 contract opened at 16,760 yuan/mt intraday. From early trading to mid-session, prices moved sideways within the 16,730-16,780 yuan/mt range. Late in the session, prices fluctuated higher and touched a high of 16,810 yuan/mt, before closing at 16,785 yuan/mt, posting a small bullish candlestick, up 90 yuan/mt, or 0.54. Boosted by market sentiment, lead prices overall fluctuated upward today. Supply side, maintenance and production resumptions at primary lead enterprises proceeded in parallel, while finished product inventories at secondary lead smelters increased slightly WoW this week, and imported lead continued to flow into the Chinese market, leaving overall supply relatively ample. Demand side, with the traditional off-season for lead-acid batteries approaching and the Qingming Festival holiday drawing near, downstream purchase willingness was cautious, and spot market transactions were weak. Overall, resistance to lead prices was evident in the short term. Data source disclaimer: Except for publicly available information, all other data is processed and derived by SMM based on public information, market communication, and SMM's internal database models, and is for reference only and does not constitute decision-making advice.

This week, 304 stainless steel scrap off-cuts prices in east China held steady at 10,100-10,200 yuan/mt; prices for the same grade of stainless steel scrap off-cuts in Foshan dropped back slightly, with the price range at 9,700-10,000 yuan/mt. Raw material production cost side, the current cost of producing stainless steel entirely from stainless steel scrap was about 14,218.64 yuan/mt, while the production cost of using only high-grade NPI was 14,745.57 yuan/mt. This week, stainless steel scrap prices remained largely stable, mainly as supportive and constraining factors were intertwined, with no obvious one-way trend. Stainless steel finished product prices edged down under pressure from weaker SS futures, and market sentiment was somewhat disturbed, but this did not directly transmit to the stainless steel scrap market, where prices remained stable. Substitute furnace charge performed steadily, with both high-grade NPI and high-carbon ferrochrome prices largely stable this week and showing no obvious fluctuations in change, so their overall impact in driving stainless steel scrap prices was limited and failed to provide effective support or drag. Factors supporting the stable performance of stainless steel scrap prices were more prominent. The recent tightness in stainless steel scrap tax invoices eased somewhat, improving the market trading environment. Meanwhile, the economic advantage of stainless steel scrap over high-grade NPI remained in place. In addition, stainless steel mills' April production schedules stayed high, and steel mills increased their use of stainless steel scrap with economic advantages, lifting recent market trading activity, while previously accumulated inventory pressure also eased to some extent, providing strong support for stable prices. However, constraining factors also remained. Stainless steel finished product prices currently faced difficulty moving higher, and under this transmission effect, stainless steel scrap prices still faced some pressure to rise, making any obvious upward trend difficult to emerge. Overall, the stainless steel scrap market this week showed a pattern of "strong support, clear constraints, and stable prices." Supportive and constraining factors counterbalanced each other, and stainless steel scrap prices were expected to remain stable in the short term.

[SHFE/LME Price Ratio Pulled Back to Fluctuate Below 7.2]: This week, the SHFE/LME price ratio pulled back to fluctuate around 7.2, and the zinc ingot import window remained closed. Outside China, Powell released a dovish signal that long-term inflation expectations remained anchored, while LME Cash-3M shifted into a backwardation structure. Inventories outside China remained at low levels, cancelled warrants increased sharply, and LME zinc surged. On Friday, the LME zinc market was closed for a holiday.

As production order fully resumed after the Chinese New Year, the sodium-ion battery industry chain saw a strong recovery in March. Production across the four major segments—cathode, anode, electrolyte, and battery cell—posted substantial growth both YoY and MoM, with industry prosperity rebounding markedly.

[SMM Daily Review: As the Holiday Approaches, the Market Turns Sluggish and the Price Center of High-Grade NPI Moves Lower] April 3 News: SMM's upstream sentiment factor for high-grade NPI was 2.69, down 0.05 MoM, while the downstream sentiment factor for high-grade NPI was 1.49, down 0.02 MoM.

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 Tin Midday Commentary: Tin Prices Stabilized and Fluctuated Amid a Geopolitical Stalemate, While Spot Market Trading Turned Subdued]

[Worsening Supply Concerns and Gradual Demand Recovery Stabilize the Center of Aluminum Prices with Geopolitical Premiums ]Overall, the market's core focus in the period ahead is on whether key aluminum smelters in the Middle East will further expand production cuts. If the cuts continue to materialize, they will provide strong upward momentum for global aluminum prices, coupled with support from expectations of a gradual release of demand during China’s peak season. In the short term, aluminum prices are expected to remain in a high-level consolidation pattern.

Today, the most-traded BC copper 2605 contract opened at 85,360 yuan/mt. After the opening, its center moved higher to a high of 85,910 yuan/mt, then fell to a low of 84,530 yuan/mt, and finally closed at 84,820 yuan/mt, down 0.84%. Open interest reached 6,442 lots, up 237 lots from the previous trading day, while trading volume reached 4,508 lots, up 219 lots from the previous trading day. On the macro front, market sentiment was affected by Trump's remarks on the US-Iran issue, with risk appetite weakening and expectations for a swift end to the Middle East conflict cooling, which was bearish for copper prices. Fundamentals, on the supply side, imported cargoes have continued to arrive recently, and overall spot circulation remained relatively ample. On the demand side, downstream enterprises still showed limited acceptance of current price levels, with just-in-time procurement remaining the main approach overall. Inventory, as of Thursday, April 2, SMM copper inventories in major regions across China fell 14.04% WoW from last Thursday, while total inventory increased 53,800 mt YoY and has posted destocking for three consecutive weeks. The SHFE copper 2605 contract closed at 95,880 yuan/mt. Based on the BC copper 2605 contract price of 84,820 yuan/mt, its after-tax price was 95,847 yuan/mt. The price spread between the SHFE copper 2605 contract and BC copper was 33 yuan/mt, showing a contango structure.