Non-Farm Payrolls Data Show Strong Performance, Copper Prices' Rally Slows [SMM Copper Morning Meeting Summary]

Futures Market: Last Friday night, LME copper opened at $9,110/mt, initially rose to a high of $9,130.5/mt, then the center shifted lower and hovered in a wide range throughout the session. During the fluctuations, it bottomed at $9,048.5/mt intraday and continued to fluctuate widely towards the close, finally settling at $9,073.5/mt, down 0.42%. Trading volume reached 19,000 lots, and open interest stood at 268,000 lots. Last Friday night, the most-traded SHFE copper 2503 contract opened at 75,370 yuan/mt, initially fell to a low of 74,980 yuan/mt, then rebounded and fluctuated widely, with the center moving higher. It peaked at 75,600 yuan/mt towards the close and finally settled at 75,430 yuan/mt, up 0.16%. Trading volume reached 28,000 lots, and open interest stood at 140,000 lots.

【SMM Copper Morning Brief】News: (1) Due to January 9 being a day of mourning for the late former US President Jimmy Carter, the CFTC position report, usually released on Saturdays Beijing time, was delayed and will be published at 4:30 am Beijing time next Tuesday (January 14). The ICE Europe market trader position report (COT) was released as scheduled. (2) On Friday (January 17), the National Bureau of Statistics (NBS) will release economic data for December 2024, including industrial output, fixed asset investment, and total retail sales.

Spot Market: (1) Shanghai: On January 10, #1 copper cathode spot prices against the front-month 2501 contract were quoted at a premium of 140-200 yuan/mt, with an average premium of 170 yuan/mt, up 25 yuan/mt MoM. Last Friday, the Shanghai-Guangdong price spread exceeded 300 yuan/mt again, with short-term supply tightening in both regions. It was reported that some suppliers transferred goods to Guangdong over the weekend, and Shanghai inventories are expected to decline further this week. Spot premiums are expected to rise further on Monday.

(2) Guangdong: On January 10, #1 copper cathode spot prices against the front-month contract were quoted at a premium of 550-570 yuan/mt, with an average premium of 560 yuan/mt, up 70 yuan/mt MoM. Overall, a significant inventory decline pushed premiums higher, but actual transactions were limited. Arrivals over the weekend are expected to increase, and premiums may fluctuate lower this week.

(3) Imported Copper: On January 10, warehouse warrant prices were $66-80/mt, QP January, with the average price flat MoM; B/L prices were $58-72/mt, QP February, with the average price flat MoM; EQ copper (CIF B/L) was $6-20/mt, QP February, with the average price flat MoM. Quotes referenced cargoes arriving in mid-to-late January and early February. Due to rising copper prices, the SHFE/LME price ratio worsened, leading to poor market transactions amid a supply-demand mismatch. Buyers focused on cargoes arriving in early-to-mid February, while offers were concentrated on mid-to-late January arrivals. Overall, the market remained quiet with limited transactions.

(4) Secondary Copper: On January 10, secondary copper raw material prices rose by 300 yuan/mt MoM. Guangdong bare bright copper prices were 68,600-68,800 yuan/mt, up 300 yuan/mt MoM. The price difference between primary metal and scrap was 2,355 yuan/mt, up 146 yuan/mt MoM. The price difference between primary and secondary copper rods was 1,605 yuan/mt. According to an SMM survey, import traders in Ningbo Zhenhai reported that recent quotes for European secondary copper raw materials did not decline with rising copper prices due to tight supply. After the US halted purchases, attention shifted to Europe and the Middle East, prompting local suppliers to stand firm on quotes.

(5) Inventory: On January 10, LME copper cathode inventory increased by 475 mt to 264,425 mt. On January 10, SHFE warehouse warrant inventory decreased by 827 mt to 12,640 mt.

Prices: Macro side, US non-farm payrolls data for December 2024 showed an increase of 256,000 jobs, and the unemployment rate unexpectedly fell to 4.1%. Strong non-farm data reinforced expectations that the US Fed will pause interest rate cuts later this month. Traders no longer bet on two rate cuts by the Fed this year. The US dollar index closed higher, weighing on LME copper. However, with copper rod enterprises resuming operations before the Chinese New Year, physical buying remained stable, supporting SHFE copper. Fundamentals side, the Shanghai-Guangdong price spread widened to 300 yuan/mt again, with short-term supply tightening in both regions. Some suppliers reportedly transferred goods to Guangdong over the weekend, and Shanghai inventories are expected to decline further this week. Overall, with the US dollar index hovering at highs, copper prices are expected to face limited upside today.

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【The above information is based on market collection and comprehensive evaluation by the SMM research team. The information provided is for reference only and does not constitute direct investment advice. Clients should make prudent decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.】