SMM Morning Comment For SHFE Base Metals On January 9

SHANGHAI, January 9 (SMM) –

Copper

Overnight, LME copper opened at $9,020.5/mt, initially moved downward into a narrow rangebound fluctuation, hitting a low of $8,956/mt. It then fluctuated upward, reaching a high of $9,061/mt near the session's end, and finally closed at $9,051/mt, up by 0.79%. Trading volume reached 19,000 lots, and open interest stood at 262,000 lots. Overnight, the most-traded SHFE copper 2502 contract opened at 74,300 yuan/mt, initially hitting a low of 74,220 yuan/mt before fluctuating upward. It reached a high of 74,830 yuan/mt near the session's end and finally closed at 74,780 yuan/mt, up by 0.46%. Trading volume reached 24,000 lots, and open interest stood at 141,000 lots. Macro side, US December ADP employment data recorded 122,000, below the market expectation of 140,000, marking the lowest level since August 2024. Initial jobless claims last week were recorded at 201,000, the lowest since the week of February 17, 2024. Signs of a cooling labour market may lead the US to keep interest rates unchanged in January despite persistently high inflation. Additionally, sources revealed that Trump is considering declaring a national economic emergency to provide legal grounds for imposing widespread tariffs, which boosted the US dollar index and overall limited copper price gains. Fundamentally, the market saw tight availability of spot copper cathode, while downstream demand in areas surrounding Shanghai continued to weaken, leading to overall moderate market transactions. Spot premiums/discounts are expected to remain stable. In terms of prices, the December meeting minutes indicated that the time to slow the pace of interest rate cuts has been reached or is near. The US dollar index is expected to remain high, limiting copper price gains.

Aluminum

Futures Market: Overnight, the most-traded SHFE aluminum 2502 contract opened at 19,670 yuan/mt, hit a high of 19,680 yuan/mt, a low of 19,610 yuan/mt, and closed at 19,675 yuan/mt, down 55 yuan/mt or 0.28%. Yesterday, LME aluminum opened at $2,522/mt, reached a high of $2,529/mt, a low of $2,490/mt, and closed at $2,508/mt, down $14.5/mt or 0.57%.

Summary: On the macro front, the Chinese government continues to focus on boosting consumption, while uncertainty over the pace of US Fed rate cuts has increased. On the fundamentals side, although several aluminum smelters in Sichuan and Guangxi reduced production in December, and some capacity resumption progress stalled, production still showed YoY growth. On the demand side, market demand continued to weaken during the off-season, with operating rates in the aluminum processing industry declining steadily. Some aluminum processing plants are nearing their holidays, and social inventories of aluminum ingots and billets are building up. Overall, on the fundamentals side, supply-side pressure has slightly eased, but weak demand during the off-season and the risk of inventory buildup persist. In the short term, aluminum prices are expected to fluctuate downward. In the long term, attention should be paid to changes in the US Fed's future rate cut stance and the pace of consumption recovery.

Lead

Overnight, LME lead opened at $1,970/mt, fluctuating rangebound during the Asian session. Entering the European session, LME lead first rose and then fell, reaching a high of $1,972/mt before plunging. With the US dollar index fluctuating at highs, LME lead faced pressure and dropped to a low of $1,928/mt, finally closing at $1,930.5/mt, down 2.13%.

Overnight, the most-traded SHFE lead 2502 contract opened lower with a gap at 16,680 yuan/mt, briefly touching a high of 16,690 yuan/mt at the beginning of the session. It fluctuated rangebound during the session, hitting a low of 16,625 yuan/mt and closing at 16,630 yuan/mt, down 0.72%.

The US December ADP employment data recorded 122,000, below the market expectation of 140,000, marking the lowest level since August 2024. Initial jobless claims last week recorded 201,000, the lowest since the week of February 17, 2024. In China, two departments introduced 27 measures to expand and intensify the implementation of large-scale equipment upgrades and trade-in policies for consumer goods. China's lithium reserves have risen to the second-largest globally, with its share increasing from 6% to 16.5%.

As the Chinese New Year holiday approaches, additional lead smelting enterprises have suspended production for maintenance, tightening supply. Downstream battery producers have shown moderate stockpiling sentiment recently, and lead ingot suppliers generally reported pressure in transactions, with only some indicating moderate downstream purchasing willingness. As mid-January approaches, attention should be paid to whether stockpiling actions by downstream battery dealers can stimulate lead ingot purchases by battery producers. Overall, lead prices are likely to fluctuate rangebound in the short term.

Zinc

Overnight, LME zinc opened at $2,874/mt, initially reaching a high of $2,882/mt. After the opening, it trended downward along the daily moving average, hitting a low of $2,810/mt during the night session. Subsequently, LME zinc fluctuated around $2,825/mt and eventually closed lower at $2,822.5/mt, down by $56.5/mt or 1.96%. Trading volume increased to 14,595 lots, while open interest decreased by 2,118 lots to 216,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 5-day moving average forming resistance. LME zinc inventory decreased by 4,000 mt to 220,525 mt, a drop of 1.78%. The ongoing uncertainty surrounding US tariff policies continued to disrupt the market, while the US dollar index strengthened further, exerting pressure on zinc prices. The downward trend in LME zinc persisted.

Overnight, the most-traded SHFE zinc 2502 contract opened at 24,070 yuan/mt, initially reaching a high of 24,080 yuan/mt. After the opening, it quickly declined to a low of 23,815 yuan/mt, then rebounded from the low to fluctuate near the daily moving average. It eventually closed lower at 23,950 yuan/mt, down by 275 yuan/mt or 1.14%. Trading volume increased to 99,888 lots, while open interest rose by 100 lots to 103,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the upper Bollinger Band forming resistance. Dragged down by the overseas market trend and the unchanged domestic supply increase and demand decrease pattern, SHFE zinc continued to decline during the night session.

Tin

During yesterday's night session, SHFE tin fluctuated at low levels before slightly rebounding, returning to the position of 252,000 yuan/mt. Overall, spot market prices fluctuated widely following SHFE tin prices, with spot premiums/discounts for various brands slightly reduced. Although spot premiums/discounts narrowed, considering the issue of absolute prices, spot market transactions remained mediocre yesterday. Most trading enterprises engaged in scattered transactions, while imported tin ingots were still relatively popular due to their lower prices, and spot imported tin remained relatively tight. Most trading enterprises are not considering restocking before the holiday and plan to enter the holiday after clearing current inventory. Most downstream enterprises currently have sufficient inventory to maintain production until early next week, when some demand gaps may emerge. If tin prices decline subsequently, coupled with downstream restocking demand, the spot market is expected to witness a vibrant situation.

Nickel

Spot Premiums/Discounts: The mainstream spot premium quotation range for Jinchuan No.1 nickel is 3,300-3,600 yuan/mt, with an average premium of 3,450 yuan/mt, down by 100 yuan. The Russian nickel premium/discount quotation range is -200 to 100 yuan/mt, with an average premium/discount of -50 yuan/mt, down by 50 yuan.

Futures Market: In the morning, nickel prices rose by over 1%, increasing by 1,820 yuan to 125,030 yuan, with a decline of 1.4%.

With the futures market rising, Jinchuan brand nickel premiums dropped back slightly, with an average premium of 3,450 yuan/mt. Demand side, entering January, the overall market transactions remained sluggish recently. Supply side, top-tier enterprises have no plans for production cuts in January, and overall production supply remains sufficient. Under the relatively loose supply and demand situation, nickel prices are expected to fluctuate downward in the short term.

Nickel Sulphate Price Spread: Nickel briquette prices are 124,400-124,900 yuan/mt, up by 2,125 yuan/mt compared to the previous trading day's spot price. Nickel sulphate remains at a discount to refined nickel.