SMM Morning Comment For SHFE Base Metals (Jan 13)

SHANGHAI, Jan 13 (SMM) –
Copper
Non-Farm Payrolls Data Show Strong Performance, Copper Prices' Rally Slows [SMM Copper Morning Meeting Summary]
Futures Market: Last Friday night, LME copper opened at $9,110/mt, initially rose to a high of $9,130.5/mt, then the center shifted lower and hovered in a wide range throughout the session. During the fluctuations, it bottomed at $9,048.5/mt intraday and continued to fluctuate widely towards the close, finally settling at $9,073.5/mt, down 0.42%. Trading volume reached 19,000 lots, and open interest stood at 268,000 lots. Last Friday night, the most-traded SHFE copper 2503 contract opened at 75,370 yuan/mt, initially fell to a low of 74,980 yuan/mt, then rebounded and fluctuated widely, with the center moving higher. It peaked at 75,600 yuan/mt towards the close and finally settled at 75,430 yuan/mt, up 0.16%. Trading volume reached 28,000 lots, and open interest stood at 140,000 lots.
Prices: Macro side, US non-farm payrolls data for December 2024 showed an increase of 256,000 jobs, and the unemployment rate unexpectedly fell to 4.1%. Strong non-farm data reinforced expectations that the US Fed will pause interest rate cuts later this month. Traders no longer bet on two rate cuts by the Fed this year. The US dollar index closed higher, weighing on LME copper. However, with copper rod enterprises resuming operations before the Chinese New Year, physical buying remained stable, supporting SHFE copper. Fundamentals side, the Shanghai-Guangdong price spread widened to 300 yuan/mt again, with short-term supply tightening in both regions. Some suppliers reportedly transferred goods to Guangdong over the weekend, and Shanghai inventories are expected to decline further this week. Overall, with the US dollar index hovering at highs, copper prices are expected to face limited upside today.
Aluminum
US Fed's Interest Rate Cut Pace Unclear, Domestic Efforts Continue to Boost Consumption [SMM Aluminum Morning Meeting Summary]
Futures Market: Last Friday night, the most-traded SHFE aluminum 2502 contract opened at 20,230 yuan/mt, hitting a high of 20,250 yuan/mt and a low of 20,125 yuan/mt, and closed at 20,185 yuan/mt, up 40 yuan/mt or 0.20%. Last Friday, LME aluminum opened at $2,545/mt, reached a high of $2,596/mt and a low of $2,539/mt, and closed at $2,568.5/mt, up $20.5/mt or 0.80%.
Summary: Macro factors are mixed, with the Chinese government continuing efforts to boost consumption, while uncertainty remains over the pace of US Fed interest rate cuts. Fundamentals side, primary aluminum capacity remained stable in early January, while alumina fundamentals continued to show a slight surplus, with spot alumina prices likely to continue their downward trend in the short term. On the cost side, the aluminum industry's costs are expected to keep declining. Demand side, market demand continues to weaken during the off-season, with operating rates in the aluminum processing industry declining steadily. Some aluminum processing plants are nearing holiday closures. Although pre-holiday concentrated restocking has led to inventory reductions exceeding expectations, providing short-term support for aluminum prices, the sustainability of this trend is expected to be limited. Key points to watch include the impact of falling spot alumina prices on primary aluminum costs, as well as downstream holiday schedules and the continuity of pre-holiday restocking.
Lead
Domestic and Overseas Lead Ingots Destocking, Lead Prices Rebound [SMM Lead Morning News]
Last Friday, LME lead opened at $1,935/mt. Against the backdrop of a continuous decline in LME lead inventory, LME lead rebounded after testing lower levels. The overall trading center of LME lead shifted upward, with an intraday high of $1,985/mt, marking a new high in nearly one and a half months. By the close, it settled at $1,981/mt, up 2.3%.

Last Friday, the most-traded SHFE lead 2502 contract opened at 16,665 yuan/mt. Ahead of the Chinese New Year, downstream sectors gradually restocked, and lead ingot inventory decreased as expected. SHFE lead also rebounded, with the price surging to 16,725 yuan/mt during the early session. However, concerns about weakening consumption persisted in the market. During the latter half of the trading session, SHFE lead fluctuated between 16,625-16,700 yuan/mt, eventually closing at 16,660 yuan/mt, up 1.22%. Its open interest reached 38,570 lots, down 277 lots from the previous trading day. Additionally, the SHFE lead 2502 contract has been gradually rolling over to the SHFE lead 2503 contract recently, drawing attention to the contract rollover of the most-traded contract.
Zinc
Fundamental Support Weakens, Zinc Prices Fluctuate at Low Levels [SMM Zinc Morning Comment]
Last Friday, LME zinc opened at $2,854.5/mt. In early trading, LME zinc consolidated around the daily moving average, then bulls increased positions, pushing the center of LME zinc upward, reaching a high of $2,906/mt during the night session. By the end of the session, profit-taking by bulls caused the center to shift downward to $2,870/mt, and it ultimately closed higher at $2,862.5/mt, up by $2.5/mt or 0.09%. Trading volume decreased to 11,363 lots, while open interest increased by 1,351 lots to 218,000 lots. Last Friday, LME zinc formed a long upper shadow candlestick, with resistance from various moving averages above. LME inventory decreased by 2,825 mt to 214,075 mt, a drop of 1.3%, marking a reduction in LME inventory. Strong non-farm payrolls data reinforced expectations that the US Fed would not implement significant interest rate cuts this year. A stronger US dollar limited the upside room for LME zinc.

Last Friday, the most-traded SHFE zinc 2502 contract opened at 24,300 yuan/mt. In early trading, shorts pressured SHFE zinc downward, hitting a low of 24,145 yuan/mt. Subsequently, as shorts exited, SHFE zinc rebounded upward, recording a V-shaped reversal and reaching a high of 24,355 yuan/mt. Later, the center fluctuated downward to around 24,210 yuan/mt, and it ultimately closed higher at 24,215 yuan/mt, up by 70 yuan/mt or 0.29%. Trading volume decreased to 69,302 lots, while open interest decreased by 388 lots to 97,533 lots. Last Friday, SHFE zinc formed a bearish candlestick, but the MACD bearish bars narrowed. After falling below the previous low of 24,000 yuan/mt, SHFE zinc lacked sufficient downward momentum due to continued destocking in social inventory, maintaining a primarily low-level fluctuation.

Tin
Supply Side Gradually Tightens, SHFE Tin May Maintain a Volatile Pattern During the Chinese New Year Holiday [SMM Tin Morning Meeting Summary]
Last week, the tin market exhibited volatility and uncertainty, with SHFE tin prices experiencing significant fluctuations under the interplay of bullish and bearish factors. In the international market, tin price movements, domestic supply and demand conditions, and macroeconomic data collectively influenced market trends. Specifically, the price of the most-traded SHFE tin futures contract initially rose after the New Year opening but later faced selling pressure and pulled back, ultimately closing lower compared to the previous trading day. Supply side, refined tin production in December declined by 4.41%. With the Chinese New Year approaching, production is expected to continue decreasing. The operating rates of refined tin smelters in Yunnan and Jiangxi provinces slightly dropped to 63.04%, while processing fees continued to decline, indicating increasing pressure on raw material supply. Demand side, the recovery expectations in the new energy and electronics industries remain optimistic, particularly in the EV and renewable energy sectors, which are driving tin demand growth and supporting tin prices in the medium and long term. However, in the short term, factors such as low inventory levels and policy changes have led to cautious market sentiment. In the spot market, transactions were relatively mediocre, with most traders engaging in scattered deals. Some imported tin cargoes arrived at ports, but due to high pre-sale volumes, spot imported tin remains relatively tight. Coupled with the approaching year-end, most traders hold limited inventories, which may lead to tighter spot supply in the future. Recently, technical indicators for SHFE tin prices have weakened, suggesting insufficient upward momentum in the near term. However, the gradual tightening of the spot market will provide some support. In the coming period, investors should closely monitor global economic data, domestic economic policies, and changes in industry demand to better grasp the trends in SHFE tin prices while guarding against potential risks. With the combined influence of domestic and international economic conditions, policy adjustments, and the supply and demand dynamics of the tin industry, SHFE tin prices are expected to maintain a fluctuating trend in the short term. Investors are advised to remain cautious and stay updated on market developments.
Nickel
Nickel Sulphate Supply Remains Tight, Salt Plant Finished Product Inventories Stay at Low Levels [SMM Nickel Morning Meeting Summary]
Last week, nickel prices overall fluctuated downward, with refined nickel prices showing some volatility during the week. From January 6 to 10, the mainstream spot premiums for Jinchuan No. 1 nickel gradually declined from 3,500-3,600 yuan/mt to 3,000-3,300 yuan/mt, with the average premium dropping from 3,550 yuan/mt to 3,150 yuan/mt. In the futures market, nickel prices rose by 600 yuan to 125,170 yuan in the morning, an increase of 0.48%, but market transactions remained sluggish. On the macro front, Indonesia's macro policies had some impact on nickel prices, with LME nickel prices rebounding to $15,500/mt (Ni contained), supporting stronger costs. Domestically, high-grade NPI prices fluctuated downward, and stainless steel mills entered a seasonal maintenance period, leading to reduced production and lower demand for NPI. Due to the rainy season, port arrivals of nickel ore from the Philippines were expected to show no growth, and port inventories continued to decline to 8.396 million wmt, equivalent to 65,930 mt in metal content. In the industry chain, nickel sulphate prices rose slightly, with the battery-grade nickel sulphate index price reaching 26,420 yuan/mt, as supply remained tight and finished product inventories at salt plants stayed low. On the supply and demand side, precursor plants had mostly completed January stocking, and market inquiry activity was relatively low. Overall, with a loose supply-demand balance, SHFE nickel prices are expected to continue fluctuating downward next week.