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SMM Morning Comment For SHFE Base Metals December 27

iconDec 27, 2023 09:54
The LME was closed due to the Christmas Day holidays.

SHANGHAI, December 27 (SMM) –
The LME was closed due to the Christmas Day holidays. The most active SHFE 2402 copper contract prices opened at 69230 yuan/mt and finished at 69020 yuan/mt last evening, down 0.25%, with the low-end of 68970 yuan/mt and the high-end of 69400 yuan/mt. Trading volume was 30,000 lots, and open interest stood at 154,000 lots. On the macro front, there was a lack of relevant data during the overseas Christmas holidays, and Shanghai copper fell against the background of a light market in the last week of the year. In terms of fundamentals, from the supply side, the supply of goods that can be circulated in the market in East China has begun to decrease. Faced with the large discounts, many sellers may choose to directly deliver to warehouses in the future, which will further reduce the supply of goods in the market. However, The current overall supply is not tight. In terms of consumption, the price of copper is running at a high level, and the large discounts did not significantly increased the enthusiasm of downstream purchasing. Near the end of the year, buyers purchased as required. If copper prices continue to run at a high level, demand will continue to be under pressure. Copper prices will lack impetus to rise due to weak demand.
In the futures market, the most-traded SHFE 2402 aluminium contract opened at 19235 yuan/mt overnight, with its low and high at 19200 yuan/mt and 19280 yuan/mt before closing at 19240 yuan/mt, up 50 yuan/mt or 0.26%.
On the macro front, the annualised 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 will turn to interest rate cuts. Views. This supported aluminium prices. After major state-owned banks lowered deposit interest rates, joint-stock banks have also lowered deposit interest rates. China's main expected goals this year are expected to be successfully achieved. In terms of fundamentals, Qinghai Province has implemented power load management due to earthquake relief, and the supply of aluminium may change due to upstream influences. On the demand side, demand is still expected to remain weak. The traditional off-season is approaching, and many companies have begun to withdraw funds for settlement at the end of the year. The willingness to restock has declined. It is expected that the destocking of aluminium companies' warehouses will slow down, but the inventory will still remain low. SMM predicts that the domestic social inventory of aluminium ingots will remain low in the near future and is affected by upstream raw materials, and the short-term aluminium price will remain strong.
LME was closed for holidays yesterday.
The most active SHFE lead contract prices opened at 15705 yuan/mt and closed at 15720 yuan/mt last evening, with the high-end of 15770 yuan/mt. Trading volume decreased by 16,231 lots to 13,944 lots and open interest decreased 558 to 51631 lots.
Overnight, the LME market was closed for Christmas Day holiday.
The most-traded SHFE 2402 zinc contract opened at 21440 yuan/mt in overnight trading, and fluctuated downward. The contract closed at 21275 yuan/mt, down 125 yuan/mt or 0.58%. Trading volume stood at 35,000 lots, and open interest decreased by 1286 lots to 87,000 lots. From the spot point of view, the long-term orders in 2023 have ended, and the market trading among traders was light; the absolute price of zinc is relatively high, which inhibits the enthusiasm of downstream replenishment, and the consumption of downstream is also weak. Affected by the fundamentals, the prices fell back.
The price of the most active SHFE 2402 tin contract rose rapidly after opening in overnight trading session, and finally closed at 210280 yuan/mt, up 0.96%.
During the early trading yesterday, spot quotes of various domestic tin ingot brands did not change much. Among them, the premiums of small brand tin ingots stood at a maximum of 500-200 yuan/mt, and the premiums of delivery brands ranged from 200 yuan/mt to 800 yuan/mt. Yunxi brand was quoted with premiums of 800-1100 yuan/mt, and imported tin brand were quoted with discounts of 1100-800 yuan/mt. The overall price of tin rose slightly yesterday, and trading companies reported that the purchasing sentiment of downstream companies declined compared with the previous day. Most trading companies purchased modestly in the morning, and the spot market transactions remained quiet yesterday afternoon. Generally speaking, the spot market transactions yesterday were relatively subdued due to the recent high tin prices.
On November 26, the most active SHFE nickel contract prices opened at 130970 yuan/mt and closed at 129140 yuan/mt, a decrease of 1760 yuan/mt from the closing price of the previous trading day. The trading volume increased by 42530 lots, and the open interest increased by 46811 lots. Both long and short increased their positions. This also shows that the short side has a firmer attitude than the long side and is more confident that the market prices will continue to fall; at the same time, the long is unwilling to admit defeat and is also increasing its positions at low levels. If prices drop overly significantly, bulls will enter the market. This, combined with the retreat of shorts, will push up nickel prices. From a macro perspective, the problem of shipping conflicts has been alleviated, some shipping companies may restart routes in the Red Sea region, and the macro bullish sentiment has gradually weakened. From a fundamental point of view, due to the downward trend in nickel sulfate prices and other raw material prices combined with the recent sideways trading of SHFE nickel, some companies that had incurred losses earlier have returned to profits. Some smelters have also resumed normal production. Supply is expected to be ample. It is expected that the nickel price may fall further in the near term.

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