SMM Morning Comment For SHFE Base Metals (Nov 29)

SHANGHAI, Nov 29 (SMM) –

Copper

US Dollar Edges Higher, Copper Prices Decline Overnight [SMM Copper Morning Comment Nov 29]

LME copper opened at $8,975.5/mt overnight, initially dipping to $8,963.5/mt before rebounding and peaking at $9,015/mt near the close, ultimately settling at $8,987/mt, down 0.34%. Trading volume reached 12,000 lots, and open interest stood at 271,000 lots. The most-traded SHFE copper 2501 contract opened at 73,670 yuan/mt, fluctuated widely at the beginning, dipping to 73,510 yuan/mt mid-session, then climbed to 73,800 yuan/mt near the close, and finally settled at 73,730 yuan/mt, down 0.16%. Trading volume reached 27,000 lots, and open interest stood at 159,000 lots. Macro side, US President Joe Biden expressed hope that Trump would reconsider plans to impose tariffs on Mexico and Canada, stating that it could "damage relations with close allies." Market sentiment was relatively positive, with the US dollar edging higher, which was bearish for copper prices. Fundamentally, the market is currently dominated by imported copper, with limited domestic supply. Suppliers are standing firm on quotes and reluctant to sell, leading to a cooling in overall trading atmosphere. According to SMM data, as of Thursday, November 28, SMM copper inventories in major regions across China increased by 4,600 mt compared to Monday, reaching 137,500 mt, but decreased by 23,800 mt compared to last Thursday, marking the sixth consecutive week of destocking despite an intra-week inventory rise. Looking ahead to next week, with smelter maintenance ending and continuous arrivals of imported copper, spot supply of copper cathode is expected to increase. Attention will be on whether destocking can continue next week. Price-wise, the macro environment has been relatively quiet recently, with market focus on the upcoming release of China's official manufacturing PMI data for November on Saturday. Copper prices are expected to remain volatile at low levels today.

Aluminum

Strong Risk Aversion Sentiment as December Approaches, Aluminum Market Remains Pessimistic [SMM Aluminum Morning Briefing Nov 29]

Overnight, the most-traded SHFE aluminum 2501 contract opened at 20,235 yuan/mt, reached a high of 20,315 yuan/mt, a low of 20,220 yuan/mt, and closed at 20,275 yuan/mt, down 80 yuan/mt from the previous day, a decline of 0.39%. Yesterday, LME aluminum opened at $2,597/mt, hit a high of $2,603/mt, a low of $2,563/mt, and closed at $2,590/mt, down $12/mt, a decline of 0.46%.

Summary: On the macro front, the anticipated tariffs by Trump on Canada, Mexico, and China may trigger concerns over a global tariff war and trade war, putting pressure on the non-ferrous metals market. The ceasefire agreement between Lebanon and Israel lasted only one day, significantly increasing geopolitical uncertainties, and market risk aversion sentiment continues to rise. Domestically, positive signals were released as the General Office of the CPC Central Committee and the General Office of the State Council issued opinions on the reform and innovative development of digital trade, fostering and expanding digital trade business entities. On the fundamentals side, aluminum costs fluctuate at highs, raising market concerns about production cuts at high-cost enterprises. However, by the end of November, downstream buying sentiment weakened, and the spot market saw weak consolidation. In terms of inventory, the continuous improvement in railway shipments in Xinjiang has stabilized arrivals. Coupled with the limited sustainability of increase in aluminum ingot outflows from warehouses in the off-season, it may be difficult to prevent continuous inventory buildup. The off-season inventory turning point is expected to arrive soon, significantly weakening the support of low inventory for aluminum prices. In the short term, apart from the cost side, the aluminum market currently lacks additional support. The cancellation of export tax rebates for aluminum semis negatively impacts medium and long-term aluminum demand, putting overall market sentiment under pressure. Aluminum prices are expected to mainly fluctuate and consolidate in the near term.

Lead

Lead Prices Fluctuate Upward, Downstream Enterprises Adopt a Wait-and-See Attitude [SMM Lead Morning Comment Nov 29]

Overnight, LME lead opened at $2,058.5/mt, fluctuated downward during the Asian session, and dipped to $2,037/mt in the European session. However, due to the weakening US dollar, the pressure on base metals was released, and LME lead rebounded in a V-shape, reaching a high of $2,070/mt and finally closing at a high of $2,044/mt, down 0.78%.

Overnight, the most-traded SHFE lead 2501 contract opened at 16,955 yuan/mt, briefly touched a low of 16,935 yuan/mt at the beginning of the session, and then fluctuated rangebound around the intraday moving average. The contract reached a high of 17,470 yuan/mt and finally closed at 17,365 yuan/mt, up 2.79%.

Macro side, Trump stated that he would raise tariffs on China after taking office. The Chinese Ministry of Commerce responded that China's stance against unilateral tariff hikes is consistent. The Biden administration is expected to announce new export restrictions on China as early as this week. The Chinese Ministry of Commerce responded that if the US insists on escalating controls, China will take necessary measures. The General Office of the CPC Central Committee and the General Office of the State Council issued opinions on the reform and innovative development of digital trade, aiming to cultivate and expand digital trade business entities. The China Banking Research Institute expects China's GDP to grow by about 5% in 2025. The Ministry of Commerce commented on the progress of the China-EU EV anti-subsidy case, stating that consultations are still ongoing.

Fundamentals, this week, smelting enterprises in Hebei and Anhui have not fully resumed production after reducing output, while primary lead smelting enterprises in Jiangxi and Guangdong have entered maintenance, tightening lead ingot supply again. Lead prices fluctuated upward, and downstream enterprises have generally adopted a wait-and-see attitude, temporarily slowing down procurement activities. The drop in lead ingot social inventory has slowed compared to last week. In the secondary lead sector, the recovery of profits has boosted production enthusiasm among enterprises. Excluding those planning maintenance in early December, some large refineries are expected to resume production in December. Overall, lead prices are likely to hover at highs.

Zinc

SHFE Zinc Records a Bearish Candle, Daily K-line Moves Downward [SMM Zinc Morning Comment Nov 29]

Overnight, the US SEC approved the first exchange to conduct 5X23-hour trading; ECB Governing Council member stated that there are sufficient reasons for an interest rate cut in December; Israel and Hezbollah accused each other of violating the ceasefire agreement; OPEC+ online meeting was postponed to December 5; the General Office of the CPC Central Committee and the General Office of the State Council emphasized the need to cultivate and expand digital trade entities; the Bank of China Research Institute projected that China's GDP would grow by around 5% in 2025; the Ministry of Commerce responded to Trump's tariff hike, stating that China consistently opposes unilateral tariff increases; the Ministry of Commerce also responded to Biden's export controls, warning that if the US insists on escalating controls, China will take necessary measures.

Overnight, LME zinc opened at $3,140.5/mt, briefly rose to $3,168/mt at the beginning of the session, then fluctuated downward below the daily moving average to a low of $3,022/mt. It then slightly rebounded, fluctuating rangebound around $4,045/mt, and finally closed down at $3,047.5/mt, a decrease of $92.5/mt or 2.95%. Trading volume decreased to 95,219 lots, and open interest remained unchanged at 247,000 lots. Overnight, LME zinc recorded a large bearish candle, with the upper Bollinger Band forming resistance and the 60-day moving average providing support below. LME inventory increased by 7,725 mt to 268,625 mt, a rise of 2.96%. Although LME inventory increased, it remains relatively tight overall. The US dollar index slightly rose, and LME zinc may hover at highs.

Overnight, the most-traded SHFE zinc 2501 contract opened at 25,245 yuan/mt, initially rose to 25,325 yuan/mt, then fluctuated downward along the daily moving average to a low of 25,145 yuan/mt as longs reduced positions. It then fluctuated rangebound near the daily moving average and finally closed down at 25,215 yuan/mt, a decrease of 140 yuan/mt or 0.55%. Trading volume decreased to 170,000 lots, and open interest decreased by 6,531 lots to 151,000 lots. Overnight, SHFE zinc recorded a bearish candle, with the upper Bollinger Band forming resistance and the 10-day moving average providing support below. Currently, SHFE zinc is moving downward due to the exit of longs, but supply-side issues persist, which is expected to continue supporting zinc prices.

Tin

SHFE tin continued to rise during the night session; spot market transactions cooled down [SMM Tin Morning News Nov 29]

Yesterday, transactions in the spot tin market slightly cooled down, with trading enterprises slightly raising their quotations. The price range of tin ingots from various domestic brands overall moved up, with small-brand tin ingots and imported tin ingots showing a slight premium against SMM 1# tin ingot prices, while delivery brand prices and Yunnan Tin brand tin ingots showed a significant premium against SMM 1# tin ingot prices. In yesterday's market, tin prices fluctuated rangebound, starting to rise during the night session. The trading activity in the spot market did not match the brisk trading of Wednesday, with most downstream enterprises restocking only as needed, reducing their purchasing willingness. Regarding trading enterprises, most of them transacted 10-20 mt, while a few traders transacted 2-3 trucks. Overall, the market transaction atmosphere cooled down. If tin prices continue to rise, spot market transactions may become even more sluggish.

Nickel

Spot premiums/discounts: The mainstream spot premium for Jinchuan #1 nickel was 3,000-3,500 yuan/mt, with mainstream market transaction premiums concentrated at 3,000-3,200 yuan/mt. The average premium was 3,100 yuan/mt, unchanged from the previous trading day. Norilsk nickel spot premiums were -200-100 yuan/mt, with an average discount of 50 yuan/mt, up 50 yuan from the previous trading day.

Futures market: On November 27, following low-level fluctuations during the night session, SHFE nickel prices saw a slight increase in the morning. The midday closing price rose by 430 yuan/mt to 126,920 yuan/mt, an increase of 0.34%.

Spot market: In the morning, spot premiums for Jinchuan brand nickel plates in east and south China remained unchanged. Jinchuan nickel premiums were still at a relatively high level, and the discount range for domestically produced electrodeposited nickel also remained narrow. In terms of actual transactions, year-end downstream demand did not show a significant increase, and spot trading volumes did not exhibit a clear upward trend. The adjustment in spot nickel plate premiums/discounts was more due to short-term supply-demand mismatch rather than demand improvement. The upward movement of refined nickel prices will continue to face resistance.

Nickel briquette prices were 125,400-126,400 yuan/mt (out of stock), up 750 yuan/mt from the previous day.