SMM Morning Comment For SHFE Base Metals December 26

SHANGHAI, December 26 (SMM) –
Copper
LME was closed for the Christmas holiday on Monday. SHFE 2402 copper contract opened at 69130 yuan/mt overnight, with its session low and high at 68910 yuan/mt and 69230 yuan/mt before closing up 0.04% at 69090 yuan/mt. Open interest stood at 155,000 lots. On the macro front, due to overseas holiday, there is little overseas news, and the market is more in a wait-and-see mode. In terms of fundamentals, as of Monday December 25, SMM data showed copper stocks in mainstream areas of China decreased by 6,200 mt from last Friday to 50,400 mt, and also lower than 78,700 mt seen in the same period last year. The inventory decline was mainly due to the increase in direct shipments from smelters to downstream and modest downstream procurement. Continued inflows of imported copper and smelter sell-offs for cash flows at year-end will drive up total copper supply in the spot market in the last week of the year. Copper demand will decline this week after massive stockpiling last week. Under the influence of macroeconomic sentiment, copper prices are expected to be strong.
Aluminum
Overnight, the most-traded SHFE 2402 aluminum contract opened at 19155 yuan/mt, with low and high at 19085 yuan/mt and 19155 yuan/mt before closing at 19110 yuan/mt, down 105 yuan/mt or 0.55%.
On the macro front, the annual rate of the core PCE price index in the United States in November was lower than expected, and the inflation indicator cooled more than expected. In the third quarter, the actual GDP of the United States was revised downward, and consumption fell short of expectations, which further strengthened expectations that the Fed may turn to interest rate cuts, bringing support to aluminum prices. Domestic macro front continues to be positive. Major state-owned banks have lowered deposit interest rates. This year, China is expected to achieve major goals. In terms of fundamentals, Qinghai Province has implemented power load management due to earthquake relief, and the destocking of aluminum ingot inventories has slowed down, and aluminum ingot inventories may begin to grow in the future. Demand is still expected to remain weak. The traditional off-season has arrived. Companies are prioritising cash flows at the end of the year, thus their willingness to restock has declined. It is expected that the destocking of aluminum ingot social inventory will slow down, but the inventory will still remain low. Low stocks and support from raw materials may keep aluminum prices firm in the short term.
Lead
Overnight, the LME was closed for the Christmas holiday and will resume trading on Wednesday. Overnight, the most-traded SHFE 2402 lead contract opened at 15710 yuan/mt, with the highest and lowest prices at 15765 yuan/mt and 15695 yuan/mt, closing at 15700 yuan/mt, down 10 yuan/mt or 0.06%.
Zinc
Overnight, the seventh meeting of the Standing Committee of the 14th National People's Congress was held in Beijing from December 25 to 29. Overnight, LME was closed for the Christmas holiday. Overnight, the most-traded SHFE 2402 zinc contract opened at 21370 yuan/mt, and closed up 15 yuan/mt or 0.07% at 21330 yuan/mt. Trading volume was 18824 lots, and open interest rose 1121 lots to 84,000 lots. Due to the impact of the off-season, there was insufficient upward momentum for SHFE zinc, which occasionally fell back and returned to the average level of the previous few working days.
Tin
SHFE 2402 tin contract fell to 207680 yuan/mt overnight and closed at 207880 yuan/mt, down 0.12%.
Yesterday, spot premiums and discounts in domestic spot market for various tin ingot brands were as below.中Small brand tin ingots were offered at discounts of 0-500 yuan/mt over SHFE 2402 tin contract, spot premiums of 200-800 yuan/mt for delivery brands, premiums of 800-1100 yuan/mt for Yunxi brand, and discounts of 600-1100 yuan/mt imported brand tin ingots. Tin prices maintained a narrow range yesterday, with traders reporting fewer inquiries from downstream companies and a strong wait- and-see sentiment.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 130740 yuan/mt, and closed at 130900 yuan/mt, up 160 yuan/mt. Trading volume fell by 13067 lots, and open interest decreased by 8393 lots. From a macro perspective, geopolitical conflicts have blocked transportation in Red Sea area, and the market is worried about Eurasian transportation. From a fundamentals 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 producers that had previously suffered losses have returned to profits, and some smelters have also resumed normal production. Supply is expected to grow. From the demand side, as the holidays are approaching, the sentiment of downstream replenishment is gradually increasing. Therefore, trades in spot market may pick up.