SMM Morning Comment For SHFE Base Metals (Nov 28)

SHANGHAI, Nov 28 (SMM) –

Copper

US October Core PCE Data Meets Expectations, Copper Prices Decline Overnight [SMM Copper Morning Comment]

Overnight, LME copper opened and peaked at $9,046/mt, initially fluctuated downward to $8,985/mt, rebounded during the session, and finally closed at $9,018/mt, up 0.62%, with trading volume reaching 15,000 lots and open interest at 271,000 lots. The most-traded SHFE copper 2501 contract opened at 74,040 yuan/mt, initially dipped to 73,720 yuan/mt, and finally closed at 73,800 yuan/mt, down 0.2%, with trading volume reaching 27,000 lots and open interest at 153,000 lots. Macro front, data released on Wednesday showed that the US October PCE price index YoY growth rate rose to 2.3% from the previous 2.1%, while the MoM growth rate remained unchanged at 0.2%. Core PCE price index YoY growth rate slightly rose to 2.8% from the previous 2.7%, with the MoM growth rate also remaining unchanged at 0.2%. These data support recent comments from many US Fed officials that there is no urgency to cut interest rates as long as the labour market remains healthy and the economy continues to be strong. Supply side, with the import window remaining open and processing enterprises increasingly relying on imported sources due to export policies, imported sources are expected to support spot supply. Demand side, with the execution of long-term contracts ending, downstream actively seeks spot orders, leading to marginal growth in short-term demand and overall active trading. Price side, despite macro uncertainties, copper prices are expected to stabilize today with upward potential supported by consumption.

Aluminum

Fundamentals are barely supportive，except cost，the aluminum market has fluctuated downward recently [SMM Aluminum Morning Meeting Summary Nov 28]

Overnight, the most-traded SHFE aluminum 2501 contract opened at 20,555 yuan/mt, reached a high of 20,570 yuan/mt, a low of 20,320 yuan/mt, and closed at 20,415 yuan/mt, down 130 yuan/mt from the previous day, a decrease of 0.63%. Yesterday, LME aluminum opened at $2,606/mt, reached a high of $2,630/mt, a low of $2,581/mt, and closed at $2,602/mt, down $7/mt, a decrease of 0.27%.

Summary: On the macro front, the anticipated tariffs by Trump on Canada, Mexico, and China may trigger a global tariff and trade war, putting pressure on the non-ferrous metals market. Although a ceasefire between Lebanon and Israel has been confirmed by multiple parties, geopolitical uncertainties remain high, and market risk aversion sentiment continues to rise. Domestically, positive signals have been released, with the General Office of the CPC Central Committee and the General Office of the State Council issuing the "Action Plan for Effectively Reducing the Overall Logistics Costs of Society," and seven departments including the People's Bank of China jointly issuing the "Action Plan for Promoting High-Quality Development of Digital Finance." On the fundamentals side, aluminum costs fluctuate at highs, raising concerns about production cuts at high-cost enterprises. Downstream demand has slightly rebounded in the short term, stimulated by a rush to export. Regarding inventory, multiple sources report that railway shipments in Xinjiang have continued to improve, temporarily alleviating backlog pressure. With the concentrated arrival of goods in transit, despite continued outflows from warehouses in the past week, inventory buildup is expected this week. The off-season inventory turning point is expected to arrive soon, potentially easing the tight spot market in China. The support from low inventory for aluminum prices has gradually weakened. In the short term, the support logic of high costs and low inventory for domestic aluminum remains, but the support for aluminum prices has weakened. Coupled with the negative impact of the cancellation of export tax rebates for aluminum semis on medium and long-term aluminum demand, overall market sentiment is under pressure. Aluminum prices are expected to fluctuate and consolidate in the near term.

Lead

Under the dual decline in supply and demand, SHFE lead remains strong and upward [SMM Lead Morning Comment]

Overnight, LME lead opened at a low of $2,019.5/mt and fluctuated upward during the Asian session. In the European session, shorts continued to reduce positions, and LME lead remained strong and upward, finally closing at a high of $2,060/mt, up 2.49%.

Overnight, the most-traded SHFE lead 2501 contract opened at 17,250 yuan/mt and briefly touched a low of 17,220 yuan/mt at the beginning of the session. Boosted by tight spot supply due to the maintenance of several new domestic smelters, bulls increased positions, pushing SHFE lead up to 17,430 yuan/mt, and it finally closed at 17,415 yuan/mt, up 1.02%.

Macro side, the US Q3 GDP revised value remained unchanged at the initial value of 2.8%; durable goods orders in October slightly increased; initial jobless claims decreased; core PCE prices in October met expectations both YoY and MoM. The General Office of the CPC Central Committee and the General Office of the State Council issued the "Action Plan for Effectively Reducing the Logistics Costs of the Whole Society."

Fundamentals, as the end of November approaches, smelters have successively completed the settlement of November long-term contracts and started the sale of December long-term contracts. In December, primary lead smelters in Hunan and Guangdong will reduce the supply of long-term contracts due to maintenance expectations. For secondary lead, both resumption and maintenance of enterprises coexist, and overall supply is temporarily tight. On the consumption side, some lead-acid battery producers plan to reduce production recently, and the specific impact remains to be observed. Overall, lead prices may fluctuate at highs in the short term.

Zinc

SHFE Zinc Records Four-Day Winning Streak, Zinc Prices Hover at Highs [SMM Zinc Morning Comment Nov 28]

Overnight, US October PCE inflation increased slightly, in line with expectations; two key job titles in Trump's economic team were finalized; a Hamas official stated that they are ready to reach a ceasefire agreement in the Gaza Strip; US media reported that Canada is studying potential retaliatory tariffs against the US; the General Office of the CPC Central Committee and the General Office of the State Council issued the "Action Plan for Effectively Reducing Logistics Costs Across Society"; seven departments jointly issued the "Action Plan for Promoting High-Quality Development of Digital Finance"; interest rates on fixed-term deposits of various maturities fell in October, and the interest rates on large certificates of deposit entered the "1%" range.

Overnight, LME zinc opened at $3,064/mt. Initially, LME zinc's upward movement was obstructed, dipping to $3,054/mt. Subsequently, LME zinc fluctuated upward above the daily average, reaching a high of $3,149/mt. It then fluctuated downward near the daily average, with the center of gravity slightly descending below the daily average before recovering, fluctuating around $3,130/mt. It finally closed up at $3,140/mt, an increase of $75/mt, or 2.45%. Trading volume decreased to 99,794 lots, and open interest increased by 2,045 lots to 247,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the upper Bollinger Band forming resistance and the 5-day moving average providing support below. LME inventory increased by 5,275 mt to 260,900 mt, an increase of 2.06%. LME inventory increased. Currently, influenced by a weak US dollar index, LME zinc is rising, and LME inventory increased slightly. LME zinc is expected to hover at highs.

Overnight, the most-traded SHFE zinc 2501 contract opened at 25,800 yuan/mt. Initially, SHFE zinc slightly declined below the daily average, dipping to 25,685 yuan/mt. Subsequently, with increased positions from bulls, SHFE zinc's center of gravity moved upward, fluctuating rangebound around 26,000 yuan/mt, reaching a high of 26,065 yuan/mt. It finally closed up at 26,050 yuan/mt, an increase of 210 yuan/mt, or 0.81%. Trading volume decreased to 180,000 lots, and open interest increased by 13,071 lots to 177,000 lots. Overnight, SHFE zinc recorded a four-day winning streak, with various moving averages below providing support. Currently, influenced by bullish forces in the futures market, SHFE zinc continues to rise. More macro front news can be monitored subsequently, and SHFE zinc is expected to hover at highs.

Tin

SHFE tin remained in a low-level fluctuation during the night session, with spot market liquidity tightening [SMM Tin Morning News Nov 28]

Yesterday, the spot tin market saw active transactions, with trading enterprises' quotations remaining stable and showing no significant fluctuations. The price range of tin ingots from various domestic brands was relatively fixed. Small brand tin ingots and imported tin ingots had a slight discount against the SMM 1# tin ingot price, while delivery brand prices and Yunnan Tin brand tin ingots had a slight premium against the SMM 1# tin ingot price. In yesterday's market, tin prices were driven down by macro factors and increased positions, maintaining low-level fluctuations during the night session. The spot market's trading activities returned to a heated state, with most downstream enterprises opting for low-level restocking and showing strong purchasing intentions. On the side of trading enterprises, most of them completed transactions of 2-4 trucks, and some traders' inventories were already depleted. Overall, the market's trading atmosphere was active, and if tin prices continue to fluctuate at low levels, spot market liquidity may become tight.

Nickel

Spot premiums/discounts: The mainstream spot premiums for Jinchuan #nickel were quoted at 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, down 200 yuan compared to the previous trading day. The spot discounts for Norilsk nickel were 200-0 yuan/mt, with an average of 100 yuan/mt, unchanged from the previous trading day.

Futures market: On November 27, SHFE nickel maintained a fluctuating trend in the morning session, initially continuing the decline from the night session before rebounding. The midday closing price fell by 2,020 yuan/mt to 126,250 yuan/mt, a decrease of 1.09%.

Spot market: In the morning, the spot premiums for Jinchuan brand nickel plates in East and South China narrowed slightly, but the change was relatively small. Currently, the spot premiums for Jinchuan brand nickel plates remain high. Some downstream enterprises have switched to imported Nikkelverk nickel or Sumitomo nickel for economic reasons. To reduce the inventory risk of Jinchuan nickel plates, traders have become less firm on their quotes. In the electrodeposited nickel market, the supply tightening has led to relatively low discounts in the short term. However, the poor demand has not changed, resulting in minimal overall price fluctuations and continued sluggish market transactions.

Price spread: Nickel briquette prices were 124,750-125,550 yuan/mt (out of stock), down 2,150 yuan/mt from the previous trading day. The price spread between nickel sulphate and nickel briquette was approximately 5,286 yuan/mt (nickel sulphate prices were 5,286 yuan/mt lower than nickel briquette prices).