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SMM Morning Comment For SHFE Base Metals December 7

iconDec 7, 2023 09:47
Source:SMM
LME copper prices opened at $8389/mt and closed at $8250/mt last evening, a drop of 1.13%, with the low-end of $8238/mt and the high-end of $8422/mt.

SHANGHAI, December 7 (SMM) –
Copper
LME copper prices opened at $8389/mt and closed at $8250/mt last evening, a drop of 1.13%, with the low-end of $8238/mt and the high-end of $8422/mt. Trading volume stood at 23,000 lots, and open interest stood at 282,000 lots. The most active SHFE 2401 copper contract prices opened at 68050 yuan/mt and closed at 67200 yuan/mt last evening, down 0.77%, with the high-end of 68190 yuan/mt and the low-end of 67200 yuan/mt. Trading volumes stood at 29,000 lots and open interest stood at 149,000 lots. On the macro front, ADP employment in the US in November recorded 103,000, compared to the expected 130,000. This confirmed the weakening of the U.S. job market and strengthened market expectations for the prospect of the Federal Reserve cutting interest rates again. In terms of fundamentals, according to SMM, the tight supply of goods in Shanghai has been alleviated to a certain extent. Both imported copper and domestic copper have arrived. However, due to high premiums, some companies shut down their furnaces. It will still take time to restart the furnaces. Therefore, although prices dropped significantly, it did not trigger large-scale downstream purchases. In addition, the expansion of the price spread between front-month and next-month contracts has a certain suppression on the premiums and discounts. If it continues to expand, it is expected that the premiums and discounts will continue to decline. Inventories in South China declined, which combined with a downward trend in the market, prompted holders to raise prices. But due to the large price spread between front-month and next-month contracts, downstream purchasing enthusiasm was not high. In terms of consumption, more companies took deliveries under long-term orders at the beginning of the month. If the market stabilizes, demand is expected to increase in the future. There will be room for copper price increases.
Aluminum
Overnight, the most-traded SHFE 2401 aluminum contract opened at 18430 yuan/mt, with its low and high at 18400 yuan/mt and 18485 yuan/mt before closing at 18400 yuan/mt, down 35 yuan/mt or 0.19%. LME aluminum opened at $2165.5/mt yesterday, with its high and low at $2169.5/mt and $2140/mt respectively before closing at $2141/mt, down 1.13%.
ADP employment data has fallen short of expectations for four consecutive months, which may indicate that the U.S. labor market continues to cool significantly. Domestic macroeconomic data have weakened, and the manufacturing PMI index remained below 50%. There are growing expectations for the release of domestic favorable policies at the end of the year, but it will still take time to transmit to the manufacturing industry 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 negative and the off-season will pressure aluminum prices. At the same time, inventory continues to be reduced, giving aluminum prices certain support.
Lead
LME lead opened at $2051.5/mt and consolidated sideways in Asian trading hours yesterday, falling to $2023/mt during the European trading hours. It finally closed at $2025/mt, down $27.5/mt or 1.34%, falling for 13 consecutive days.
The most-traded SHFE 2401 lead contract opened at 15515 yuan/mt and fell 40 yuan/mt or 0.26% to close at 15525 yuan/mt last evening, briefly hitting the lowest point at 15500 yuan/mt and the highest point at 15515 yuan/mt.
Zinc
Overnight, LME zinc opened at US$2,432/ton and touched a high of US$2,467.5/ton. Prices hit a low of 2,412.5/mt at the end of the day, and finally closed up at 2,421.5/mt, up 3.5/mt, or 0.14%. The trading volume decreased by 1,313 lots to 10,935 lots, and the open interest decreased by 3,536 lots to 202,000 lots. LME inventory fell by 2,425 tons to 218,700 tons, a decrease of 1.10%. The retail sales of the Eurozone in October was lower than expected and recorded 0.1%, indicating that the economy is still in a weak state, and the US dollar index rose again during the night trading session, lowering LME zinc.
The most active SHFE 2401 zinc contract prices opened at 20640 yuan/mt and lost 90 yuan/mt or 0.44% to settle at 20445 yuan/mt in overnight trading, with the high-end of 20665 yuan/mt and the low-end of 20440 yuan/mt. Trading volumes decreased 61,085 to 38,400 lots and open interest fell 669 lots to 87,600 lots.
Tin
SHFE 2401 tin contract rose to 207950 yuan/mt overnight, closing at 206600 yuan/mt, up 2.31%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands did not change much. Small brand tin ingots were offered at premiums of 0-400 yuan/mt over SHFE 2312 tin contract, versus premiums of 500-800 yuan/mt for delivery brands, premiums of 1000-1100 yuan/mt for Yunxi brand, and discounts 500-700 yuan/mt imported brand tin ingots. The price of tin rose sharply yesterday, and traders reported that there were fewer transactions. Downstream companies still mainly consumed inventory and were not enthusiastic about purchasing.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 125250 yuan/mt, and closed at 130550 yuan/mt, up 5430 yuan/mt. Trading volume rose 95284 lots, and open interest decreased by 4234 lots. From a macro perspective, ADP employment data has fallen short of expectations for four consecutive months, which may indicate that the U.S. labor market continues to cool significantly. From a fundamental perspective, the recent decline in nickel prices has led to a pick-up in spot market transactions. Nickel price is expected to move rangebound, with little upward momentum.

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