How has the market performed over the past two weeks since the import window opened? [SMM Analysis]

Macro-wise, the US October core PCE price index year-on-year rate rose slightly to 2.8% from the previous 2.7%. The US Fed's November monetary policy meeting minutes indicated that economic activity remained stable, but slower job growth and rising unemployment kept the Fed's December interest rate cut expectations intact. The CME FedWatch tool showed a 66.5% probability that the Fed would not cut rates in December. Last week, Trump announced plans to gradually raise tariffs on the border after taking office, increasing the long-term upside room for the US dollar against the Canadian dollar. Japan's November CPI recorded 2.2%, providing more data support for subsequent rate hikes. In China, the profits of industrial enterprises above a designated size fell by 4.3% YoY from January to October. The contraction of corporate balance sheets dragged down the upside room for copper prices. During the week, LME copper consolidated at a low level of around $8,950-9,100/mt, while SHFE copper fluctuated rangebound at 73,500-74,500 yuan/mt.

In terms of foreign trade, the import window remained open last week, with suppliers actively seeking goods. A large number of cargoes arriving in late November were locked in for import. Meanwhile, warehouse warrant prices surged, and a large number of registered deliverable cargoes were traded. During the week, registered pyro copper B/L premiums were between $55-65/mt, with actual transactions at around $50-60/mt. Registered pyro copper warehouse warrant premiums were between $55-70/mt, with actual transactions at around $50-63/mt. EQ copper prices also remained firm, with actual transaction premiums at around $15-20/mt. Currently, it is difficult to find quotations in the market for late November and early December supplies. On one hand, negotiations for long-term contracts of US dollar copper are in full swing, and on the other hand, some buyers have large reverse arbitrage positions, leading to liquidity issues.

In the domestic market, the operating rate of copper semis continued to rise during the week, with year-end orders experiencing a brief boom, pushing up spot premiums/discounts under consumption support. Social inventory in South China bottomed out, creating a significant price spread between spot premiums/discounts and those in Shanghai, with some east China cargoes moving south. However, the off-season is approaching, and maintenance at large smelters in Shandong has gradually ended, leading to expectations of gradually easing spot supply in the future, with the overall supply surplus situation expected to continue.

Looking ahead to this week, the US November non-farm payrolls data is expected to be released, with the unemployment rate and job additions influencing the Fed's December interest rate cut path. In China, the Central Political Bureau meeting and the Central Economic Work Conference will be held in mid-December. After the 2024 debt reduction and regulatory policies are introduced, the market expects more liquidity stimulus to be released. In the short term, copper prices are expected to remain stable. In the spot market, domestic social inventory is still on a dropping trend, and with consumption support, spot premiums are expected to rise rather than fall as we enter December.