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SMM Morning Comment For SHFE Base Metals December 22

iconDec 22, 2023 09:57
LME copper prices opened at $8535/mt and closed at $8606/mt in last evening trading, a gain of 0.12%, with the low-end of $8531.5/mt and the high-end of $8630/mt.
SHANGHAI, December 22 (SMM) –
LME copper prices opened at $8535/mt and closed at $8606/mt in last evening trading, a gain of 0.12%, with the low-end of $8531.5/mt and the high-end of $8630/mt. Trading volume was 15,000 lots, and open interest stood at 280,000 lots. The most active SHFE 2402 copper contract prices opened at 68660 yuan/mt and closed at 69000 yuan/mt last evening, up 0.28%, with the high-end of 69100 yuan/mt and the low-end of 68610 yuan/mt. Trading volumes stood at 31,000 lots and open interest stood at 148,000 lots. On the macro front, the final annualized quarterly rate of real GDP in the United States in the third quarter was 4.9%, lower than the expected 5.20%. This has strengthened the market’s expectations for an interest rate cut that the United States will consider as early as next year. The U.S. index weakened and copper prices rebounded. In terms of fundamentals, from the supply side, the current supply of copper is still tight, and due to the seasonal reduction in port efficiency at the end of the year, the inflow of imported copper during the week was also lower than expected. It is expected to enter the market in large quantities next week. In terms of consumption, although copper prices have fallen slightly, they are still at a high level. Downstream purchasing sentiment has not picked up. Many copper rod factories have shut down their furnaces. Some companies with normal production said that current orders are poor and inventories are gradually increasing. Under high copper prices, market demand is generally suppressed. There will be limited room for copper price increases.
Overnight, the most-traded SHFE 2401 aluminum contract opened at 18980 yuan/mt, with its low and high at 18980 yuan/mt and 19045 yuan/mt before closing at 19025 yuan/mt, down 10 yuan/mt or 0.05%. LME aluminum opened at $2237/mt yesterday, with its high and low at $2248/mt and $2222/mt respectively before closing at $2248/mt, up 0.11%.
The domestic macroeconomic outlook has once again been positive, and the central bank has proposed to increase counter-cyclical and inter-cyclical adjustments to guide reasonable credit growth. The National Development and Reform Commission will study and introduce new measures and plan stockpiling policies. Overseas, the continued crisis of the Red Sea route suspension has brought new uncertainty to the global macro. In terms of fundamentals, the domestic aluminum supply side is operating stably for the time being, but the rain and snow in the north in winter puts great pressure on transportation, and we still need to pay attention to the arrival of domestic aluminum products. Demand is still expected to weaken. The traditional off-season is approaching, and many companies will show less willingness to restock. It is expected that the destocking of aluminum ingots will slow down, but the inventory will still remain low. Low inventories may still support aluminum prices next week.
Overnight, LME lead opened at US$2,073/ton and closed at US$2,063/ton, a decrease of 0.72%. Due to the Christmas holiday, the LME will close early at 20:30 today. Traders should pay attention to changes in trading hours.
The most active SHFE 2402 lead contract prices opened at 15620 yuan/mt with the low-end of 15585 yuan/mt, and finally closed at 15615 yuan/mt, up 0.26%. Open interest were up 947 lots to 57296 lots.
Overnight, LME zinc opened at $2564.5/mt, hitting a high of $2576.5/mt and a low of $2538.5/mt respectively, and closed at $2553/mt, down $16.5/mt or 0.64%. Trading volume decreased to 7843 lots, and open interest fell 3519 lots to 193,000 lots. Overnight, LME zinc inventories increased by 150 tons to 230,750 tons, an increase of 0.07%. LME inventories are still at a high level. Although the U.S. GDP and PCE index were unexpectedly revised down in the third quarter and macro sentiment improved, inventories are still high and funds are mainly hedging and leaving before the holiday. Zinc prices fluctuated weakly.
The most active SHFE 2402 zinc contract prices opened at 21165 yuan/mt and fell 5 yuan/mt or 0.02% to close at 21115 yuan/mt trading with the high-end of 21220 yuan/mt and the low-end of 21095 yuan/mt. Trading volumes decreased to 35662 lots and open interest fell increased lots to 83060 lots. Fundamentally, the shortage of ore coupled with low inventory and cost support kept zinc prices range-bound.
SHFE 2401 tin contract fell to 207720 yuan/mt overnight and closed at 209000 yuan/mt, up 0.31%.
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 200-300 yuan/mt over SHFE 2401 tin contract, versus premiums of 200-800 yuan/mt for delivery brands, premiums of 1000-1100 yuan/mt for Yunxi brand, and discounts of 500-800 yuan/mt imported brand tin ingots. Tin prices remained range-bound yesterday, and trading companies reported that downstream companies' purchasing willingness was still weak, and many held a wait-and-see attitude.
Overnight, the most-traded SHFE nickel contract opened at 131060 yuan/mt, and closed at 129830 yuan/mt, down 1370 yuan/mt. Trading volume fell by 547 lots, and open interest decreased by 4986 lots. From a macro perspective, the impact of the Red Sea crisis on pure nickel transportation remains to be seen, and there is currently no obvious impact. From a fundamental point of view, due to the downward trend of nickel sulphate prices and other raw material prices combined with the recent sideways trading of SHFE nickel, some refined nickel companies that previously suffered losses have returned to profits, driving some to resume normal production. It is expected that refined nickel output will increase month-on-month in December.
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