SMM Morning Comment For SHFE Base Metals On December 10

SHANGHAI, December 10 (SMM) –

Copper

Overnight, LME copper opened at $9,215.5/mt, initially dipped to $9,197/mt, then fluctuated upward, reaching an intraday high of $9,260/mt, and finally closed at $9,231.5/mt, up 1.53%, with a trading volume of 20,000 lots and an open interest of 274,000 lots. Overnight, the most-traded SHFE copper 2501 contract opened at 75,430 yuan/mt, initially dipped to 75,350 yuan/mt, then rose to an intraday high of 75,730 yuan/mt, and finally dropped back slightly to close at 75,570 yuan/mt, up 1.04%, with a trading volume of 40,000 lots and an open interest of 156,000 lots. Macro side, a New York Fed survey showed that US 1-year inflation expectations rose to 2.97% from the previous 2.87%. The US dollar index returned above the 106 mark, which exerted some pressure on copper prices but was relatively weak. Domestically, China's November CPI increased by 0.2% YoY and decreased by 0.6% MoM; PPI decreased by 2.5% YoY and increased by 0.1% MoM. Additionally, the Central Committee of the Communist Party of China stated in its Politburo meeting that the main economic and social development goals for the year will be successfully achieved, with the implementation of more proactive fiscal policies and moderately loose monetary policies, and strengthening extraordinary counter-cyclical adjustments, which boosted copper prices. Fundamentally, supply side, domestic copper arrivals remained low, and imported copper arrivals did not increase significantly, with supply relatively unchanged from last week. Demand side, copper prices still exhibited sideways movement, but the center shifted upward, with downstream buyers purchasing as needed, leading to overall average market transactions. According to SMM, as of Monday, Dec 9, SMM copper inventory in major regions nationwide decreased by 11,000 mt to 119,700 mt compared to last Thursday, but total inventory was 55,000 mt higher than the same period last year at 65,000 mt, with Shanghai inventory further destocking by 8,000 mt. Spot premiums were supported at the bottom. Price-wise, attention should still be paid to the suppressive effect of the US dollar index on copper prices. Copper prices are expected to fluctuate rangebound today.

Aluminum

Overnight, the most-traded SHFE aluminum 2501 contract opened at 20,415 yuan/mt, reached a high of 20,535 yuan/mt, a low of 20,400 yuan/mt, and closed at 20,445 yuan/mt, up 105 yuan/mt from the previous day, an increase of 0.52%. On Monday, LME aluminum opened at $2,604/mt, hit a high of $2,622.5/mt, a low of $2,584/mt, and closed at $2,596.5/mt, down $11/mt, a decrease of 0.42%.

Summary: On the macro front, yesterday's meeting of the Central Political Bureau of the Communist Party of China released positive signals, causing a collective rise in non-ferrous metals. On the fundamentals side, aluminum costs fluctuate at highs, raising market concerns about production cuts at high-cost enterprises. Although weak consumption combined with an inventory buildup in aluminum ingots, the social inventory of aluminum ingots remains relatively low at below 600,000 mt. Currently, positive macro signals have ignited the confidence of bulls, and short-term aluminum prices are expected to fluctuate upward. Changes in aluminum costs and overseas market tax trends remain key focal points that need close attention.

Lead

Overnight, LME lead opened at $2,065/mt, consolidating around the daily moving average during the Asian session. Entering the European session, it climbed to a high of $2,097/mt before falling under pressure, ultimately closing at $2,066/mt, down $0.5/mt, a decrease of 0.02%.

Overnight, the most-traded SHFE lead 2501 contract opened at 17,775 yuan/mt, climbed to a high of 17,825 yuan/mt before adjusting downwards, touched a low of 17,675 yuan/mt, and then slightly rebounded, ultimately closing at 17,760 yuan/mt, up 85 yuan/mt, an increase of 0.48%.

Macro side, after the release of US November employment and unemployment data, traders bet on a slower pace of interest rate cuts, continuing the US dollar's rebound trend. Domestically, the December Politburo meeting reiterated a moderately loose monetary policy, continuing to expand domestic demand and implement more proactive fiscal policies.

Fundamentally, after the smog warning was issued in Anhui on December 8, some highway sections were closed, slowing vehicle transportation and temporarily affecting the supply of spot refined lead and battery scrap. The recovery of secondary refined lead production may be lower-than-expected due to environmental protection impacts. After year-end maintenance at primary lead smelters, supply in some regions tightened, downstream buyers were cautious, and some procurement demand shifted to warehouse sources, leading to a slight decrease in lead ingot social inventory. Lead prices corrected from high levels but remained strongly supported below. Attention should be paid to the possibility of suppliers transferring inventory to warehouses and the timing of the smog warning being lifted.

Zinc

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Overnight, LME zinc opened at $3,071/mt, initially fluctuated downward, hitting a low of $3,062/mt, then rebounded and climbed, reaching a high of $3,153.5/mt near the close, before falling back to near the daily average line, finally closing up at $3,128/mt, up $28/mt, or 1.82%. Trading volume increased to 12,007 lots, and open interest rose by 177 lots to 245,000 lots. Overnight, LME zinc recorded a bullish candlestick, with the 40-day moving average providing support. LME zinc inventory decreased by 725 mt to 278,125 mt, a decline of 0.26%. The CPC Politburo held a meeting to analyze and study the economic work for 2025, proposing to implement more active fiscal policy and moderately loose monetary policy to boost consumption and expand domestic demand, reigniting market optimism, which significantly lifted LME zinc during the day.

Overnight, the most-traded SHFE zinc 2501 contract opened at 25,880 yuan/mt, initially reaching a high of 25,995 yuan/mt, then slightly dipping to 25,805 yuan/mt. During the night session, SHFE zinc fluctuated rangebound around the daily average line, finally closing up at 25,820 yuan/mt, up 230 yuan/mt, or 0.90%. Trading volume decreased to 92,902 lots, and open interest increased by 3,412 lots to 133,000 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the upper Bollinger Band forming resistance. Macro positive sentiment boosted SHFE zinc to gap higher, coupled with weak supply support on the fundamentals, SHFE zinc fluctuated at highs during the night session.

Tin

In yesterday's night session, SHFE tin prices opened high and continued to rise due to the boost from macro policies. However, during the daytime session, the overall trading atmosphere in the spot market was relatively quiet, with trading volume continuing to shrink. Smelters showed moderate willingness to sell, but overall shipments were relatively small. Trading enterprises actively quoted prices, but market transactions were limited. Downstream enterprises made a few inquiries and just-in-time procurements. Due to the previous accumulation of some inventory, downstream enterprises tended to adopt a wait-and-see attitude as prices gradually increased, awaiting new market developments. Overall, market activity remained sluggish, and the trading atmosphere was dull. Specifically, most trading enterprises' trading volumes barely maintained around 10 mt, with a few enterprises reaching a trading volume of one truckload. As prices rise, some downstream enterprises are expected to start making small purchases to guard against significant price increases.