Copper: Overnight, both domestic and international copper prices fluctuated within a narrow range, with China's refined copper imports remaining at a loss. On the macroeconomic front, U.S. non-farm payrolls rose by 64,000 in November, exceeding market expectations, but October’s employment data was significantly revised downward. The unemployment rate climbed to 4.6%, the highest level since 2021, confirming a cooling labor market. However, uncertainty remains over whether this will prompt the Fed to reconsider a January rate cut, though market expectations for easing in early 2024 have risen. Meanwhile, the U.S. December Markit Composite PMI preliminary reading came in at 53, below the expected 53.9 and the previous 54.2, with both manufacturing and services sectors underperforming amid slowing order growth and rising price indices. Domestically, China’s Central Financial Office emphasized expanding domestic demand as a top priority for 2024, alongside continued moderately loose monetary policy. Inventory-wise, LME copper stocks held steady at 165,875 tons; COMEX copper warrants rose by 1,652 tons to 412,444 tons; SHFE copper warrants increased by 3,558 tons to 45,784 tons; and BC copper warrants grew by 1,012 tons to 6,977 tons. With the Bank of Japan’s meeting imminent, macro uncertainties and overseas financial market volatility may dampen risk appetite, warranting short-term caution.
Nickel & Stainless Steel: Overnight, LME nickel fell 0.28% to $14,255/ton, while SHFE nickel dropped 0.66% to 111,890 yuan/ton. LME inventories rose by 360 tons to 253,392 tons, and SHFE warrants increased by 2,622 tons to 37,872 tons. LME 0-3 month backwardation remained negative, while import nickel premiums held at 400 yuan/ton. Nickel ore benchmark prices edged lower, with premiums stable. In the traditional supply chain, nickel-iron prices stabilized, and stainless steel spot market sentiment improved, with social inventories across major markets down 1.55% WoW to 1.0636 million tons. In the new energy sector, raw material prices were dragged lower by year-end bargain hunting and weakening demand, as ternary precursor production fell MoM in December. Primary nickel inventories in China resumed accumulation. Weak fundamentals continue to pressure nickel prices, with attention on overseas industrial policies and macro sentiment.
Alumina, Aluminum & Aluminum Alloy: Overnight, alumina edged higher, with the AO2601 contract up 0.75% to 2,553 yuan/ton amid a 1,002-lot reduction in open interest to 190,000 lots. SHFE aluminum also rose, with AL2602 gaining 0.14% to 21,825 yuan/ton and open interest down 736 lots to 288,000 lots. Aluminum alloy AD2602 inched up 0.05% to 20,925 yuan/ton, with open interest dropping 61 lots to 17,565 lots. Spot alumina prices dipped to 2,787 yuan/ton, while aluminum ingot discounts widened to 100 yuan/ton. Foshan A00 aluminum fell to 21,520 yuan/ton, at a 100-yuan discount to Wuxi A00. Aluminum bar processing fees rose 70–120 yuan/ton, while aluminum rod fees were mixed. With year-end alumina contract negotiations underway, producers remain reluctant to cut output despite losses. Domestic bauxite supply remains tight, while Australian ore shipments stay strong. Alumina faces lingering downside risks, while aluminum prices hold firm on expectations of tighter supply and seasonal logistics disruptions in Xinjiang.
Industrial Silicon & Polysilicon: Industrial silicon weakened on the 16th, with the SI2605 contract down 0.59% to 8,365 yuan/ton and open interest up 1,514 lots to 202,000 lots. Spot prices held at 9,580 yuan/ton, with #421 silicon at an 485-yuan premium. Polysilicon strengthened, with the PC2605 contract up 1.48% to 58,600 yuan/ton and open interest rising 5,174 lots to 148,000 lots. N-type polysilicon prices steadied at 52,350 yuan/ton, at a 6,300-yuan discount to futures. Production cuts in Southwest China met expectations but failed to offset weak demand, keeping prices range-bound. Exchange measures eased polysilicon squeeze risks, while market speculation on capacity reserves fueled divergence between stocks and futures.
Lithium Carbonate: The LC2605 contract rose 1.4% to 101,060 yuan/ton. Spot battery-grade lithium carbonate gained 650 yuan/ton to 95,150 yuan/ton, with industrial-grade up 650 yuan/ton to 92,650 yuan/ton. Battery-grade lithium hydroxide (coarse) rose 500 yuan/ton to 83,530 yuan/ton. Warrant inventories increased by 210 tons to 15,260 tons. Supply disruptions intensified as Yichun revoked 27 mining licenses, curbing production expectations. Weekly output rose 59 tons to 21,998 tons, with spodumene-based output up 260 tons to 13,744 tons, while lepidolite-based output fell 200 tons to 2,876 tons. December output is forecast up 3% MoM to 98,210 tons. Demand weakened, with ternary material output down 384 tons WoW to 18,313 tons and LFP output down 1,336 tons to 94,144 tons. Inventories fell 2,133 tons WoW to 111,469 tons, with turnover days dropping to 26.5 days. Supply constraints and weaker restocking expectations support prices, with downside risks limited by strong mid-term demand prospects.
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