SMM Morning Comment For SHFE Base Metals January 12

SHANGHAI, January 12 (SMM) –
Copper
LME copper prices opened at $8386.5/mt and closed at $8375/mt overnight, down 0.19%, with the highest of $8460/mt and the lowest of $8348/mt. Trading volume was 22,000 lots, and open interest stood at 278,000 lots. The most active SHFE 2402 copper contract prices opened at 68160 yuan/mt and closed at 67920 yuan/mt last evening, down 0.16%, with the high-end of 68300 yuan/mt and the low-end of 67820 yuan/mt. Trading volumes stood at 19,000 lots and open interest stood at 115,000 lots. On the macro front, the U.S. non-seasonally adjusted CPI recorded an annual rate of 3.4% in December and a monthly rate of 0.3%, exceeding expectations. Speak by Federal Reserve officials suppressed interest rate cut expectations. This is expected to weigh on copper prices. In terms of fundamentals, from the supply side, actual trading was weak after inventory increased, premiums continued to fall, and supply became ample. Overall consumption has not picked up significantly. As the weekend approaches, if copper prices continue to fall, consumption is expected to pick up to some extent. In terms of price, the timing of the Federal Reserve's interest rate cut is expected to be postponed, but bets on the extent of interest rate cuts throughout the year have increased. The downside space for copper prices is expected to be limited.
Aluminum
Overnight, the most-traded SHFE 2403 aluminum contract opened at 19,080 yuan/mt, with high and low at 19,085 yuan/mt and 18,935 yuan/mt before closing at 18,970 yuan/mt, down 85 yuan/mt or 0.45%. LME aluminum opened at $2,234/mt on Thursday, with high and low at $2,252/mt and $2,229.5/mt respectively before closing at $2,235/mt, unchanged from the previous trading day.
From a macro perspective, overnight data showed that the U.S. consumer price inflation rate in December was higher than expected, suppressing market interest rate cut expectations. The dollar rose, suppressing aluminum prices. In terms of fundamentals, as the disturbance in the alumina supply re-emerged, the domestic aluminum production entered a period of stable operation, but imported aluminum ingots may increase; as for demand, aluminum downstream operating rates continued to be weak, and the amount of aluminium ingot produced was expected to increase MoM. However, domestic aluminum ingot inventories continued to remain low and alumina market performed well, supporting aluminum prices. Short-term aluminum prices will remain volatile, and we need to pay close attention to the pace of the Federal Reserve's interest rate cuts, domestic consumption and inventory changes.
Lead
Overnight, LME lead prices opened at US$2,086/ton and reached a maximum of US$2,121.5/ton, finally closing at $2,095.5/ton, an increase of 0.6%.
The most active SHFE 2403 lead contract prices opened at 16510 yuan/mt and rose due to expanding output cuts, with the high-end of 16555 yuan/mt, and finally closed at 16465 yuan/mt, up 0.24%. Open interest were up 3404 lots to 55398 lots.
Zinc
Overnight, LME zinc prices opened at US$2,508/ton, with a high of US$2,532/ton and a low of US$2498.5/ton. Prices finally closed at US$2,506/ton, up US$2.5/ton, or 0.1%. The trading volume decreased by 1,476 lots to 7,507 lots, and the open interest increased by 198 lots to 210,000 lots. LME zinc inventory fell by 1,550 tons to 213,675 tons, a decrease of 0.72%. Federal Reserve officials stated in their speech that they would not prejudge that the United States would cut interest rates in March, further reducing market expectations.
Overnight, the most-traded SHFE 2403 zinc contract opened at 21160 yuan/mt and fall to a low of 21050 yuan/mt before closing at 21075 yuan/mt, down 30 yuan/mt or 0.14%. Trading volume decreased to 21415 lots, and open interest increased by 3503 lots to 65076 lots.
Tin
SHFE 2402 tin contract rose slightly overnight and closed at 206270 yuan/mt, up 0.14%.
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 discounts of 0-500 and premiums of 0-300 yuan/mt over SHFE 2402 tin contract, versus premiums of 0-800 yuan/mt for delivery brands, premiums of 1000 yuan/mt for Yunxi brand, and discounts of 1000-1100 yuan/mt for imported brand tin ingots. The overall tin price maintained an upward trend in early trading yesterday. Trading companies reported that most downstream companies had a wait-and-see attitude, with fewer inquiries.
Nickel
Overnight, the most-traded SHFE nickel contract opened at 124700 yuan/mt, and closed at 128970 yuan/mt, up 4050 yuan/mt. Trading volume rose 58198 lots, and open interest decreased by 5672 lots. From a macro perspective, we still need to pay attention to the U.S. non-seasonally adjusted CPI annual rate for December released on January 11 and the U.S. interest rate meeting on February 1. This will be the first interest rate meeting in 2024. LME nickel inventories increased by 288 mt yesterday, all of which came from Singapore warehouses. Nickel price is expected to move rangebound.