[Early Trading Report] Fluctuations in international geopolitical news continue to cause disturbances, with chemical products and some non-ferrous metals showing relatively strong trends - 20260407

Edit date: 2026/4/7

News Brief

Macro Headlines

1. U.S. President Donald Trump said at a press conference that whether the war with Iran is about to escalate or is close to ending depends on Iran’s response to the “final deadline” set by him at 20:00 Eastern Time on April 7.

2. Iran has responded to Pakistan regarding the proposal put forward by the United States to end the war. Iran’s response includes 10 clauses. The core points include: emphasizing that a permanent end to the war must be achieved according to Iran’s concerns; and putting forward a series of demands, such as ending regional conflicts, drafting a security passage agreement for the Strait of Hormuz, post-war reconstruction, and lifting sanctions, etc.

Financial Calendar

At 16:00 Beijing time, the euro zone’s March services sector PM1 / composite PMI data will be released.

Financial Derivatives

Stock Index Futures

Risk appetite weighed down by the U.S.-Iran conflict

Last week, the A-share market surged and then retreated. The Shanghai Composite Index cumulatively closed down 0.86%, while the ChiNext Index closed down 4.44%. Ahead of the holiday, trading value continued to decline to 1.67 (prior value: 1.86) trillion yuan. From the industry perspective, the communications and pharmaceutical sectors performed relatively strongly, while the power equipment and new energy sectors led the decline. As stock index futures followed the weakness in spot index performance, the basis was repaired slightly.

On the macro front, during the holiday period the situation in the Middle East warmed up again, and there is still a high level of uncertainty, which suppresses market risk appetite. Considering China’s assets have high energy security and strong independent supply-chain capacity, they may receive a value re-rating. However, the market bottom in the short term is still unclear; keep an eye on developments in the U.S.-Iran conflict.

Treasury Bond Futures

More policy disruptions; the bond market stays cautious

Last cycle, bond prices first went up then down, and the directional drivers remain unclear. On the macro front, the situation in the Middle East continues to fluctuate, uncertainty persists, and market concerns are still hard to dissipate. On the liquidity side, the People’s Bank of China’s monetary policy stance remains loose, but attention to external shocks has increased. Last week, the PBOC’s open market operations were overall more cautious regarding injections, but funding costs still stayed at a low level, and the loose liquidity environment has not changed. Overall, domestic economic data improved somewhat. Although the sustainability still needs confirmation, with increasing overseas disruptions, market expectations for monetary policy remain relatively cautious, and the very-long-end still carries volatility risks. At present, liquidity is still relatively loose, and short-end rates are expected to remain stable.

Nonferrous Metals

Precious Metals

The U.S.-Iran standoff drags on sentiment; cautiously bullish on gold

Gold: U.S.-Iran negotiations are nearing the final ultimatum set by Trump, which falls at 8:00 a.m. Beijing time on Tuesday. Disagreements over the Middle East situation remain significant. However, market trading logic has already shown signals of switching from tightening expectations to stagflation expectations, including that currency-tightening expectations have retreated from their phase-specific peak, and the “gold-oil seesaw” effect has weakened, which may cause the negative impact on precious metals to diminish at the margin. In addition, the recent behavior of a few central banks reducing gold holdings in March has not changed the long-term trend of central banks’ overall net gold purchases and the decline in dollar credit. Liquidity was stable for the time being last week. Maintain the view that gold is bullish in the long run; it is recommended to hold long-term long positions with light exposure.

Silver: Disagreements in the Middle East remain large, but as concerns about stagflation heat up, the geopolitical negative impact on precious metals has weakened at the margin. However, considering the stagflation stage, silver typically performs generally weaker than gold, and silver’s high volatility has not been repaired. It is recommended to stay on the sidelines for new positions for now, waiting for clearer signals.

Shanghai Copper

Supply-tight scarcity expectations intensify

The tight supply pattern for copper concentrate has intensified. The flagship mine Kamoa-Kakula of Ivanhoe Mines significantly lowered its production guidance. Repair of underground mines and tight sulfuric acid supply may be the main reasons. In addition, Chilean mines reduced output notably due to lower ore grades and poor performance of key mines. With domestic resources arriving at ports declining and port ore inventories staying at low levels, processing fees saw a larger drop; the tightening expectations for supply and demand support a rebound and rise in copper prices.

Shanghai Aluminum and Alumina

The scope of production cuts in the Middle East may still expand; downside support for aluminum continues

Last week, aluminum prices continued to hold at high levels. Alumina was weak in the first half of the week, then stabilized in the second half. On the macro front, the situation in the Middle East still has uncertainty, and market expectations keep fluctuating; continue to watch developments in the situation. For alumina, the oversupply pattern is still difficult to change, and market expectations for new capacity additions in the near term have strengthened somewhat, increasing supply pressure. But current futures prices are already close to costs, the basis continues to narrow, and further downside momentum may be limited. For electrolytic aluminum, the aluminum plants under EGA have clearly announced a full shutdown, and the restart time may be as long as one year. Keep an eye on production-cut situations at other Middle East aluminum plants such as Bahrain Aluminum. There is a risk that the scope of production cuts may expand. Overall, the Middle East situation impacts both supply and demand. However, for now, the impact on the supply side remains clearer, and downside support continues. Alumina remains oversupplied, but support on the cost side limits further declines.

Shanghai Nickel

Stagflation concerns suppress upside space

On the macro front, the situation in the Middle East has warmed up again, and there is still a high level of uncertainty, which suppresses market risk appetite. Fundamental factors with both long and short drivers are intertwined. On one hand, Indonesia’s nickel ore quota for the full year remains undecided, and high nickel ore prices provide cost support to the industrial chain. On the other hand, the impact of Indonesia’s policies in the first quarter has not yet become explicit; refined nickel monthly output remains high, and inventory pressure is still significant. But the issue of tight Indonesian sulfur supply still exists. Overall, the stagflation concerns triggered by the Middle East situation suppress upside space, but fundamentals have relatively strong support; the nickel price’s choppy pattern is expected to continue.

New Energy Metals

Lithium carbonate

Supply and demand expectations continue to improve

Zimbabwe’s lithium concentrate export ban policy is unlikely to be fully relaxed in the short term. Additionally, Australia’s six operating lithium mines may reduce output due to possible diesel shortages. Overseas ore supply expectations are falling. Meanwhile, at this stage, domestic downstream cathode and cell enterprises are maintaining positive production schedules, with optimistic demand growth rates. After the impact of market sentiment weakens, lithium prices are expected to stabilize and rebound.

Silicon energy

Weak fundamentals constrain upside space; industrial silicon is expected to trade in low-range consolidation

On the supply side, there is regional differentiation. Some factories in the Northwest have maintenance and temporary shutdowns, but expectations of restart at large enterprises in Xinjiang have increased. At the same time, market rumors suggest Yunnan will reduce electricity prices this year, which may stimulate the recovery of local capacity. In the Southwest, operating rates remain low; Sichuan is expected to restart production gradually in April. On the demand side, most downstream production enterprises are in the inventory consumption phase, and procurement intentions are generally not strong, leading to noticeable looseness in spot prices. Overall, supply pressure does not ease while demand is weak; fundamentals remain in a weak and sideways-to-choppy range.

For polysilicon: currently, supply-demand contradictions in the industry are prominent. Inventories in every link of silicon feedstock continue to accumulate, and companies’ willingness to dump at low prices is increasing. However, downstream wafer makers continue to lose money, operating rates are depressed, and procurement willingness is insufficient. After the cancellation of export VAT rebates for photovoltaic products, overseas demand weakens further and module production schedules decline; negative feedback transmits upward. Combined with the falling industrial silicon prices and the approaching Southwest rainy season alongside expectations of electricity price cuts, support from production costs weakens. Until inventory is worked down and supply is cleared, prices cannot be said to stabilize.

Ferrous Metals

Steel and iron ore

Insufficient fundamental drivers; cost support weakens

1. Rebar / hot-rolled coil: Steel continues with both supply and demand increasing, and the overall trend of inventory reduction has not significantly changed. Last week, the hot-rolled coil fundamentals improved at a marginally faster pace than rebar. Considering the domestic flood season is approaching, demand-side incremental drivers are insufficient. Cost support mainly comes from the Middle East situation boosting energy prices, making it susceptible to market news. It is expected that rebar and hot-rolled coil prices this week will continue to trade in range-bound volatility. Stand aside for the time being on a directional bet. Risk warning: policy or demand surprises to the upside.

2. Iron ore: The structure of high-supply imported ore with high inventories remains unchanged. Domestic blast furnace restart space is already limited. For iron ore prices, the two major support factors are the negotiation of long-term agreements with mines and the increase in ocean freight costs; from a medium-to-long-term perspective, there is a risk of marginal weakening. It is expected that iron ore prices this week will remain in a wide-range choppy pattern. Risk warning: substantive progress in negotiations for long-term agreements with mines, release of liquidity from port imported ore inventories; geopolitical disruptions weaken.

Coke & Coal

Poor spot trading; coke & coal trend is weak

Coking coal: Some coal mines in Lüliang have suspended or reduced production due to prior accidents. However, Mongolian coal passage remains at a high level, so supply is relatively sufficient. In addition, the atmosphere for pithead auctions has weakened month-on-month, and the rate of failed bids has increased slightly. Steel-coke enterprises and traders are increasing their wait-and-see stance. Coal prices face pressure; watch how international energy prices affect coking coal prices.

Coke: Coke’s fundamentals’ contradictions are not yet significant. After the first round of price increases landed, the market moved into a game of supply and demand. But downstream procurement may slow down and shift to a just-needed rhythm, so coke futures prices may fall in line with coal prices under similar pressure.

Caustic soda and glass

Caustic soda fundamentals are weak; glass near months weak and far months strong

1. Caustic soda: As the delivery month approaches, market trading logic shifts from expectations to reality. The pattern of high supply and high inventories for caustic soda remains unchanged, and fundamentals still drive downside. However, as caustic soda futures prices fall, the premium/discount structure is repaired, and sell pressure in the market may weaken marginally. Risk warning: the U.S.-Iran situation escalates again, causing oil prices to rise beyond expectations.

2. Flat glass: Fundamentals on both supply and demand are weak. Last week, glass plants’ inventories rose instead of falling. Upstream and midstream stockpiles with high inventories need a longer time to digest. Near-month sales and delivery pressure are relatively large, and prices have reached new lows. During the rolling of positions to replace months, short funds dominate. Watch for cold repairs and firing progress at glass plants. Risk warning: demand recovers beyond expectations.

Energy & Chemical

Crude oil

Geopolitical uncertainty still exists; the risk premium is hard to fade

Although a U.S.-Iran ceasefire agreement has been proposed, both sides have issued tough statements repeatedly: Trump has again threatened strikes; Iran rejects a temporary ceasefire in exchange for navigation rights, saying the U.S. has no sincerity to reach a permanent agreement. Currently, Iran’s Supreme Leader has clearly stated that it will continue using the “strategic lever” to blockade the Strait of Hormuz. In addition, a senior advisor further warned that the blockade of the Strait of Mandeb may be possible. This strait accounts for 12% of global trade transportation and 30% of container cargo volume. If carried out, it would severely disrupt supply chains. Overall, geopolitical risk premium is hard to fade, and tail risks of supply disruption actually increase.

Methanol

Overseas operating rates remain extremely low

Overseas methanol plants’ operating rate is 50.89%, maintaining an extremely low level for 3 consecutive months. The Middle East conflict keeps escalating, and the possibility of ending it soon is low in the short term. Meanwhile, it will take at least one month for Iran’s methanol production and transportation to return to normal. In Q2, China’s methanol import volume is expected to decrease by more than 40% year-on-year, directly driving a sharp drop in the growth rate of apparent demand to -3%. The supply-demand pattern shifts from loose to tight. With the core favorable driver provided by improved supply-demand dynamics, futures contract 09 has significant room for upside. It is recommended that long positions hold patiently.

Polyolefins

Expanded production cuts at home and abroad; go long L2609

OPEC+ plans to raise production quotas to 206k barrels, and at the same time, the volume of ships transiting the Strait of Hormuz has reached the highest level since the initial stage of the Iran conflict. However, the oil supply gap is huge, and on Monday crude oil futures continued to rise. Last week, Saudi Tethe Zadadalah Chemical shut down operations, involving 1.5 million tons of ethylene capacity and 1.1 million tons of polyethylene capacity. Middle East polyolefin prices accelerated higher, and the domestic spread with China continued to widen. On Monday, the spot quotations for polyolefins in East China were further raised. The PE basis reached more than 400 yuan/ton, reflecting that the plastic futures prices are undervalued. It is recommended to go long the L2609 contract.

Economic Crops

Rubber

Raw material cost support is relatively strong

Domestically, even though ports continue to accumulate inventory, the reduction in output during the low-production season in Southeast Asia’s main producing areas may be beyond expectations. In the Hatyai market, raw material prices remain firm; cost support moves upward. Also, current demand fulfillment is positive, and the center of gravity of rubber prices gradually rises.

Cotton

Supply-demand structure is relatively tight; the mid-to-long-term drivers for cotton price increases remain unchanged

Global and domestic expectations of reduced production keep building up for the new season, providing strong support on the supply side. The proportion of drought in the main U.S. cotton-producing areas is as high as 90%; actual output is not optimistic. On top of that, recent U.S. cotton signing volume surged 94% month-on-month. Strong overseas demand will transmit to domestic markets. International oil prices have skyrocketed due to geopolitical conflicts, and the efficiency of navigation through the Strait of Hormuz has dropped sharply, pushing up costs of substitutes such as chemical fibers, which indirectly benefits cotton prices. In the domestic market, in March the manufacturing PMI returned to the expansion zone, and the Ministry of Commerce issued a dense set of policies to boost consumption, which may help improve the structure of textile demand. Overall, with strong expectations that supply will be tight next year, cotton prices are likely to rise but hard to fall.

Palm Oil

Focus on the Middle East situation and the impact of crude oil

Last week, palm oil prices stayed at high levels, and briefly broke through the 10,000 mark intraday, but pressure remains at the integer level. On Monday, the overseas market for Malaysian palm oil weakened slightly but still stayed at high levels. Uncertainty in the Middle East is causing large swings in crude oil prices, which remains the main factor affecting palm oil prices. Currently, market expectations for biodiesel demand are still relatively positive; with crude oil prices staying high, support for palm oil remains intact. Continue to watch the Middle East situation and crude oil trends.

Soybean Oil

U.S. renewable diesel policy is basically in line with expectations; watch crude oil prices

Last week, soybean oil stayed at high levels. On Monday, overseas CBOT soybean oil rose slightly, and strong crude oil prices still provide some support to domestic oils and fats. For soybean oil, as the U.S. biodiesel policy is implemented, it is basically in line with market expectations, so the additional favorable drivers from fundamentals weaken in the short term. In the short term, crude oil price action remains the main driver for the oils and fats sector; watch changes in the Middle East situation and crude oil prices.

White Sugar

Overseas support is relatively strong; domestic supply is slightly loose

Internationally, most institutions around the world are lowering their 26/27 global white sugar production forecasts. Combined with high oil prices, which constrain the production of Brazilian white sugar that is about to be processed, international sugar prices have support. Domestically, white sugar is at peak crushing. Recently released Guangxi sugar production figures were far above expectations, and domestic sugar inventory pressure is relatively high. Unless import policies tighten, domestic white sugar will remain relatively weaker than international sugar.

Data sources: Wind, Eastmoney, SteelHome, SMM, and the Xingye Futures Investment Consulting Department

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