Caixin Futures: Easing geopolitical tensions boost non-ferrous metals, precious metals rebound after decline

⑴ Copper prices showed a relatively strong performance today. On the geopolitical front, Iran's Permanent Mission to the United Nations issued a statement declaring that ships of non-belligerent countries can safely pass through the Strait of Hormuz, prompting a warming of market sentiment and a continued rebound in copper prices. From a fundamental perspective, demand from downstream sectors improved as the copper price retraced, leading to a rising willingness to purchase and a continued inventory drawdown. Considering that the U.S. government still has an interest in rate cuts, non-ferrous metal prices may stabilize in the future if geopolitical tensions ease.⑵ Aluminum prices also moved relatively strong today. Geopolitically, Iran's Permanent Mission to the United Nations reiterated that ships of non-belligerent countries can safely pass through the Strait of Hormuz, warming market sentiment and resulting in a relatively strong and volatile performance for aluminum prices. From a fundamental perspective, the threat of disruptions to navigation in the Strait of Hormuz is expected to be eliminated. Given the U.S. government's ongoing interest in rate cuts, non-ferrous metal prices are likely to find support in the future if geopolitical tensions subside, with Shanghai aluminum also finding a price floor.⑶ Zinc prices moved relatively weaker today. Geopolitically, Iran's Permanent Mission to the United Nations stated that ships of non-belligerent countries can safely pass through the Strait of Hormuz, improving market sentiment. On the fundamentals, downstream demand has picked up due to the pullback in zinc prices, driving an increase in purchasing willingness, while SMM zinc ingot inventories continue to decline, providing support to zinc prices. In view of the possibility that the conflict between the U.S. and Iran is not yet in its final stages, Shanghai zinc prices are expected to fluctuate in the short term.⑷ As for precious metals, today gold prices climbed back above 1,000 yuan/gram, and silver prices also returned above 18,000 yuan/kilogram. Geopolitical tensions have eased as Iran's Permanent Mission to the United Nations announced that ships of non-belligerent countries can safely transit the Strait of Hormuz. The market sees signs of the war winding down, and given that precious metals had previously fallen too much, prices continued to rebound today. It is worth noting, however, that at present, only the U.S. has unilaterally put forward conditions, while Iran has explicitly denied any negotiations with the United States, saying “Don’t call your failure an agreement,” so differences persist. Caution is advised with potential market reversals; prices are expected to remain volatile in the coming period.⑸ On the lithium carbonate front, Brent crude oil declined below $100, and while the U.S. puts forward terms for a peace agreement, it is also deploying marines to the Persian Gulf in preparation for a landing. Following an improvement in Middle Eastern sentiment, lithium carbonate led non-ferrous metals in a rebound; open interest in the LC05 contract declined, while open interest in the 07 and 09 contracts increased, with the futures price standing above the 20-day moving average and the lower end of the range becoming clearer. The intraday strong-weak boundary for futures is around 154,000 yuan. High oil prices are boosting expectations for increased heavy-duty truck battery capacities, and spot prices continue to rise: on March 24, SMM battery-grade lithium carbonate spot prices reported 155,950 yuan/ton, up 6,100 yuan on the day, with LC05 futures trading at a premium over spot. For operations, consider buying call options based on the 20-day moving average for swing trades.