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SMM Morning Comment For SHFE Base Metals December 15

iconDec 15, 2023 09:40
LME copper prices opened at $8540/mt overnight before reaching a low of $8511/mt and a high of $8588/mt, and closed at $8531/mt, a rise of 2.3%.

SHANGHAI, December 15 (SMM) –
LME copper prices opened at $8540/mt overnight before reaching a low of $8511/mt and a high of $8588/mt, and closed at $8531/mt, a rise of 2.3%. Trading volumes were 31,000 lots and open interest stood at 286,000 lots. The most active SHFE 2401 copper contract prices opened at 68800 yuan/mt and finished at 68670 yuan/mt last evening, up 0.94%, with the low-end of 68580 yuan/mt and the high-end of 68870 yuan/mt. Trading volume was 36,000 lots open interest stood at 148,000 lots. On the macro front, as the European and British central banks countered market expectations of interest rate cuts, in sharp contrast to the Fed's attitude, the euro rose against the U.S. dollar and the pound against the U.S. dollar both rose by more than 1%, and the U.S. index closed lower. In terms of fundamentals, the price spread between front-month and next-month contracts widened again near delivery. Yesterday, cargo holders in East China and South China both lowered prices for shipments, but there was no willingness from the downstream to buy the goods, and the overall market transaction was poor. Many downstream companies want to wait until the the delivery of the SHFE front-month contract before making purchases, and are worried about whether the insufficient supply of goods will push spot premiums and discounts higher. According to SMM, imported copper will arrive in the second half of next week, which will have a certain impact on the spot price premium and discount of copper in the domestic trade market. In terms of consumption, it is expected that market demand will continue to be poor before the delivery of the SHFE front-month contract, and replenishment will mainly be for rigid needs. It is expected that copper prices will run strongly in the near future.
Overnight, the most-traded SHFE 2401 aluminum contract opened at 18720 yuan/mt, with its low and high at 18700 yuan/mt and 18800 yuan/mt before closing at 18765 yuan/mt, up 115 yuan/mt or 0.62%. LME aluminum opened at $2151/mt yesterday, with its high and low at $2220/mt and $2151/mt respectively before closing at $2210/mt, up $65/mt or 3.03%.
On the macro front, the Federal Reserve decided to keep the benchmark interest rate unchanged at the range of 5.25%-5.50% at its December meeting, in line with market expectations. The overall performance of domestic social financing data was good, and financial support for the real economy was strong. The credit structure has improved, and the macroeconomic atmosphere at home and abroad has improved, boosting market confidence. In terms of fundamentals, the supply side has entered a period of stable operation in the short term, but we still need to be alert to the risk of production capacity reduction of aluminum in the southwest region. On the demand side, the operating rates of the aluminum processing industry weakened in December. Transportation delays and active downstream replenishment have led to a sharp reduction in domestic aluminum social inventories. The short-term low inventory status has forced short sellers to leave the market. In the short term, as delivery approaches, the supply of circulating goods is tight, which will keep SHFE front-month contract at highs.
LME lead opened at $2048/mt and rose during the Asian trading hours. During the European trading hours, LME lead briefly hit the highest point at $2077/mt, closing up 1.37% at $2068.5/mt overnight.
The most active SHFE 2402 lead contract prices opened at 15575 yuan/mt last evening, and closed at 15570 yuan/mt, an increase of 0.19%, with an intraday high of 15580 yuan/mt and the low-end of 15535 yuan/mt.
Overnight, LME zinc opened at $2454/mt, hitting a low and high of $2454/mt and $2525/mt respectively, and closed at $2483/mt, up $44/mt or 1.80%. Trading volume increased to 13071 lots, and open interest grew 2797 lots to 205,000 lots. LME zinc inventory dropped by 1025 mt or 0.49% to 210050 mt. U.S. retail sales in November recorded 0.3%, a new high since September this year, indicating that the U.S. economy maintains a moderate growth trend and concerns about economic recession have weakened. The number of initial jobless claims in the United States in the week ending December 9 was 202,000, lower than market expectations. The data showed the resilience of the U.S. economy, and the U.S. dollar index fell accordingly.
The most-traded SHFE 2402 zinc contract opened at 20820 yuan/mt overnight and fell to 20690 yuan/mt before rallying to a peak of 20910 yuan/mt. It eventually settled at 20785 yuan/mt, up 150 yuan/mt or 0.73%. Trading volume grew to 55996 lots, and open interest gained by 525 lots to 73966 lots. Beijing and Shanghai once again took action to comprehensively loosen the control policies of the property market, which may drive the growth of real estate market demand. However, China's economy is expected to be weak in November, and sluggish demand will affect consumption. The supply of zinc ingots remains at a high level.
SHFE 2401 tin contract fell to 210980 yuan/mt overnight and closed at 211120 yuan/mt, up 1.37%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as below. Small brand tin ingots were offered at premiums of 0-400 yuan/mt over SHFE 2401 tin contract, versus premiums of 200-800 yuan/mt for delivery brands, premiums of 800-1100 yuan/mt for Yunxi brand, and discounts of 200-1000 yuan/mt imported brand tin ingots. Tin prices opened high and then moved lower yesterday. Traders reported that downstream companies' willingness to inquire and place orders was sluggish as they relied on stocks on hand to produce.
Overnight, the most-traded SHFE nickel contract opened at 130000 yuan/mt, and closed at 132130 yuan/mt, down 1400 yuan/mt. Trading volume fell by 59919 lots, and open interest decreased by 10897 lots. From a macro perspective, the Federal Reserve announced that the interest rate range will remain unchanged in December, and the market expects the Federal Reserve to hint at three interest rate cuts next year. From a fundamental point of view, due to the sharp decline in nickel sulphate prices and the recent sideways movement of SHFE nickel prices, the production of pure nickel from nickel sulphate has generated profits again, and the supply of pure nickel may increase in December.

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