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SMM Morning Comment For SHFE Base Metals December 6

iconDec 6, 2023 09:51
LME copper prices opened at $8352/mt and closed at $8341.5/mt last evening, a drop of 1.01%, with the low-end of $8313/mt and the high-end of $8389.5/mt.

SHANGHAI, December 6(SMM) –
LME copper prices opened at $8352/mt and closed at $8341.5/mt last evening, a drop of 1.01%, with the low-end of $8313/mt and the high-end of $8389.5/mt. Trading volume was 27,000 lots open interest stood at 279,000 lots. The most active SHFE 2401 copper contract prices opened at 67600 yuan/mt and finished at 67530 yuan/mt overnight, with the high-end of 67780 yuan/mt and the low-end of 67490 yuan/mt, down 0.98%. Trading volume was 38,000 lots, and open interest stood at 153,000 lots. The number of JOLTS job vacancies in the United States in October was 8.733 million, well below expectations of 9.3 million and the lowest since March 2021. The U.S. ISM services index in November rebounded due to increased business activity, rising to 52.7, higher than expected. Moody's downgraded the outlook for its sovereign credit rating, and China's Ministry of Finance responded by saying it was disappointed. China's economy has great resilience and potential for development, and its long-term positive fundamentals have not changed. In terms of fundamentals, the price spread between front-month and next-month contracts widened yesterday. This,combined with the increasing arrivals of imported copper and domestic copper, lowered premiums and discounts in East China in the morning. The enthusiasm for downstream procurement has relatively recovered, and there is still support for premiums and discounts; in South China, inventories increased due to increased arrivals in the region. Although copper prices fell, the market outlook was still bearish and purchasing sentiment was not high. Premiums and discounts continued to fall yesterday. In terms of consumption, demand is expected to pick up. In terms of price, there is still room for recovery in copper prices due to low inventory support.
Overnight, the most-traded SHFE 2401 aluminum contract opened at 18,390 yuan/mt, with its high and low at 18,470 yuan/mt and 18,370 yuan/mt before closing at 18,405 yuan/mt, down 60 yuan/mt or 0.32%. LME aluminum opened at $2,185/mt yesterday, with its high and low at $2,186.5/mt and $2,150.5/mt respectively before closing at $2,165.5/mt, down $34.5/mt or 1.57%.
Experts at JPMorgan and Morgan Stanley turned sharply bearish, citing overvalued technical indicators and believe that the Federal Reserve will not cut interest rates as quickly as the market expects. Scott Rubner, managing director at Goldman Sachs, said in a report that "there is no short-position" in the market. After the S&P 500 surged 9% in November and U.S. Treasury yields fell sharply, the market is now becoming more cautious. Domestic macro data weakened, the manufacturing PMI index continues to be below 50%. Expectations for the release of favorable domestic policies at the end of the year are strong, but it will still take time to transmit them to manufacturing and other sectors. In terms of fundamentals, there are no further changes expected on the supply side in the short term, and market trading logic generally focuses on the resilience of consumer demand in the off-season. The short-term macro atmosphere is weak and the consumption off-season has a greater impact. Aluminum prices may remain weak and fluctuate. At the same time, inventory continues to be reduced, which has given aluminum prices certain support.
LME lead opened at $2095/mt and consolidated sideways in Asian trading hours yesterday, rising to $2103.5/mt during the European trading hours. It finally closed at $2050/mt, down $40.5/mt or 1.94%, falling for 12 consecutive days.
The most-traded SHFE 2401 lead contract opened at 15570 yuan/mt and fell 125 yuan/mt or 0.8% to close at 15525 yuan/mt last evening, briefly hitting the lowest point at 15480 yuan/mt and the highest point at 15770 yuan/mt.
Overnight, LME zinc opened at US$2448.5/ton and touched a high of US$2457/ton. During the European trading session, the LME zinc fluctuated all the way down, reaching a low of US$2415/ton, and finally closed down at US$2418/ton, down $20.5/ton, or 0.84%. Trading volume increased by 2659 lots to 12248 lots, and open interest decreased by 2437 lots to 198,000 lots. LME stocks decreased by 1625 tons to 221,000 tons, a decrease of 0.73%.
The most active SHFE 2401 zinc contract prices opened at 20410 yuan/mt and lost 85 yuan/mt or 0.41% to settle at 20445 yuan/mt in overnight trading with the high-end of 20620 yuan/mt and the low-end of 20360 yuan/mt. Trading volumes decreased 63115 to 46,700 lots and open interest fell 2589 lots to 91,300 lots. The fall in zinc prices has led to an improvement in the spot trading, and fundamentals have given certain support to Shanghai zinc. However, the overall supply of zinc ingots has remained ample, and SHFE zinc lacked ability to rise.
SHFE 2401 tin contract fell to 198,400 yuan/mt overnight and then rebounded to 200,490 yuan/mt, closing at 200,080 yuan/mt, down 0.42%.
During yesterday's morning trading, the price premiums and discounts quoted by trading companies for various domestic tin ingot brands were little changed. Small brand tin ingots were offered at premiums of 0-400 yuan/mt, versus premiums of 500-800 yuan/mt for delivery brands over SHFE 2401 tin contract, premiums of 1000-1100 yuan/mt for Yunxi brand over SHFE 2401 tin contract, and discounts of 500-700 yuan/mt imported brand tin ingots. Yesterday, the tin price fluctuated downwards. Trading companies responded with more low-price orders, and most downstream companies held a wait-and-see attitude. Generally speaking, the spot market transactions yesterday were still flat.
On December 5th, the most-traded SHFE nickel contract opened at 128,140 yuan/mt, and closed at 125,120 yuan/mt, down 3,340 yuan/mt. Trading volume fell by 88,786 lots, and open interest increased by 658 lots. From a macro perspective, the Federal Reserve continues to be dovish and a number of data reflect the economic decline in the U.S. market. Market expectations for the Federal Reserve to cut interest rates have increased, benefiting commodities. From a fundamentals perspective, pure nickel social inventories still show a trend of accumulation, and downstream orders have not picked up significantly yet, reflecting the poor transaction in the market yesterday. Nickel price is expected to decline and then move rangebound.

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