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SMM Morning Comment For SHFE Base Metals December 8

iconDec 8, 2023 09:50
LME copper prices opened at $8308.5/mt and closed at $8370/mt in overnight trading, a gain of 1.49%, with the low-end of $8291/mt and the high-end of $8371.5/mt.

SHANGHAI, December 8 (SMM) –
LME copper prices opened at $8308.5/mt and closed at $8370/mt in overnight trading, a gain of 1.49%, with the low-end of $8291/mt and the high-end of $8371.5/mt. Trading volume was 20,000 lots, and open interest stood at 285,000 lots. The most active SHFE 2401 copper contract prices opened at 67530 yuan/mt and finished at 67670 yuan/mt overnight, up 0.13%, with the low-end of 67490 yuan/mt and the high-end of 67770 yuan/mt. Trading volume was 19,000 lots and open interest stood at 148,000 lots. On the macro front, as of December 2, the number of initial jobless claims in the United States rose to 220,000, slightly lower than the expected 222,000. In addition, data released on Thursday showed that China's exports increased for the first time in six months in November, which stimulated market sentiment to a certain extent. The market is awaiting the upcoming non-farm payrolls report to further confirm the Fed's subsequent moves. In terms of fundamentals, as the price spread between front-month and next-month contracts continued to expand in East China yesterday, premiums and discounts fell. Downstream purchasing enthusiasm picked up. It is expected that the spot prices will unlikely continue to decline; South China was also affected by the high price spread between front-month and next-month contracts. Due to the decline in local inventory, cargo holders wanted to raise prices, but downstream acceptance was not high. In terms of consumption, both the SHFE copper price and premiums and discounts declined, which has stimulated spot demand to a certain extent. It is expected that demand will be stronger in the near future. The fundamentals will support copper prices.
Overnight, the most-traded SHFE 2401 aluminum contract opened at 18410 yuan/mt, with high and low at 18420 yuan/mt and 18305 yuan/mt before closing at 18325 yuan/mt, down 105 yuan/mt or 0.57%. LME aluminum opened at $2146/mt yesterday, with its high and low at $2156.5/mt and $2131/mt respectively before closing at $2131/mt, down 0.47%.
On the macro front, the annualized quarterly rate of real GDP in the United States in the third quarter increased from 4.9% to 5.2%, the fastest growth rate in the past two years. Inventories and government spending were the main reasons for the GDP increase. The market began to place bets on interest rate cut next year. 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.
LME lead opened at $2030/mt and consolidated sideways in Asian trading hours yesterday, falling to $2016/mt during the European trading hours. It finally closed at $2017/mt, down $8/mt or 0.4%, falling for 14 consecutive days.
Overnight, the SHFE 2401 lead contract opened at 15,525 yuan/ton, reaching a low of 15,420 yuan/ton. The weighted total positions increased slightly from 1,058 lots to 109,000 lots. The contract finally closed at 15,425 yuan/ton, down 95 yuan/ton, or 0.61%.
Overnight, LME zinc opened at US$2423.5/ton and touched a high of US$2442/ton. Prices hit a low of 2403.5/mt, and finally closed up at 2406/mt, down 15.5/mt, or 0.64%. The trading volume decreased by 1441 lots to 9494 lots, and the open interest decreased by 3188 lots to 199,000 lots. LME zinc inventory fell by 100 tons to 218,600 tons, a decrease of 0.05%. The final GDP value of the Eurozone in the third quarter was lower than expected and recorded 0%. The number of initial jobless claims in the United States for the week was lower than expected and recorded 220,000. The U.S. dollar index rebounded.
The most active SHFE 2401 zinc contract prices opened at 20625 yuan/mt and lost 40 yuan/mt or 0.19% to settle at 20525 yuan/mt in overnight trading, with the high-end of 20645 yuan/mt and the low-end of 20505 yuan/mt. Trading volumes decreased 48049 to 41975 lots and open interest grew 1200 lots to 87,800 lots. Customs data fell short of expectations. The total import and export value was US$5.41 trillion, a decrease of 5.6%, and the trade surplus narrowed.
SHFE 2401 tin contract fell to 205500 yuan/mt overnight and then rebounded to 206160 yuan/mt, closing at 206800 yuan/mt, down 0.15%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands did not changes much. Small brand tin ingots were offered at premiums of 0-400 yuan/mt over SHFE 2401 tin contract, versus premiums of 500-800 yuan/mt for delivery brands, premiums of 800-1100 yuan/mt for Yunxi brand, and discounts of 500-600 yuan/mt imported brand tin ingots. Tin prices maintained a high level yesterday, and traders reported fewer inquiries from downstream companies. Downstream companies took a wait-and-see attitude towards the continued rise in prices.
Overnight, the most-traded SHFE nickel contract opened at 129810 yuan/mt, and closed at 130540 yuan/mt, down 10 yuan/mt. Trading volume fell by 76910 lots, and open interest increased by 19577 lots. From a macro perspective, the ADP employment index in the United States in November recorded 103,000, while the market expected 130,000. The U.S. job market declined sharply, reflecting that the current U.S. market is not as hot as before. This may swing the Fed’s policy decision at its meeting in mid-to-late December. From a fundamental perspective, the recent decline in nickel prices has led to a pickup in spot market transactions. Nickel price is expected to move rangebound, with little upward momentum.

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