On December 2, 2023, the Shanghai copper main contract opened at 73,720 yuan/ton, closed at the same price with a slight decrease of 0.07%, finally settling at 73,720 yuan/ton. The trading volume for the day was 73,251 lots, with an open interest of 164,177 lots. During the night session, the Shanghai copper main contract slightly rebounded, opening at 73,810 yuan/ton and closing at 74,060 yuan/ton, up 0.47% from the previous day's midday closing.
In the spot market, following last weekend's continued inflow of imported copper, the spot premium showed some volatility. Initially, holders offered mainstream flat copper at a premium of 70-90 yuan/ton, with some high-quality copper like CCC-P and ENM quoted at 80-100 yuan/ton. As the month's structure turned to back, some holders accelerated their sales, causing the spot premium to come under pressure and fall. During the main trading session, the premium for flat copper dropped to 60-70 yuan/ton, with good copper premiums remaining at 70-80 yuan/ton, and the wet process copper premium fell to about 10 yuan/ton.
From a macroeconomic perspective, the Federal Reserve's interest rate policy has become the market's focus. Fed Governor Waller expressed a preference for a rate cut at the December meeting, seeing the decision as a way to flexibly respond to future economic changes. Other Fed officials also hold an open attitude towards rate cuts, especially sensitive to employment data, with expectations of continuous cuts in the coming year. Moreover, the US November ISM manufacturing PMI recorded 48.4, the highest since June 2024, reflecting some signs of recovery in the US economy.
On the supply side for mines, Chile's Codelco is accelerating its copper production increase to achieve its 2024 production target. The company plans to raise copper production to about 1.331 million tons by the end of the year, a growth of 0.5%. Meanwhile, Chile's overall copper production in October reached its highest level since the 2020 pandemic. Despite unresolved copper ore quality issues, major global copper producers are making significant investments to recover production.
In terms of smelting and imports, news on December 1 indicates that Chile's copper production in October grew by 6.7%, exceeding previous expectations. Chile's copper mining has gradually recovered and is expected to further improve in the coming months. This situation could have a significant impact on the global copper market's supply and demand dynamics.
From the demand side, copper prices maintained narrow fluctuations last week, especially as the year-end nears, with downstream demand not significantly boosting. However, due to some processing enterprises accelerating exports, market demand remains relatively stable. Downstream enterprises' purchasing is still mainly for just-in-time needs, with overall order performance being mild.
In terms of inventory, LME copper stocks decreased by 0.04 million tons to 270,700 tons compared to the previous trading day, while SHFE copper stocks fell by 15,700 tons to 196,000 tons. Domestic market electrolytic copper spot stocks were 143,200 tons, up 10,300 tons from the previous week.
In the international market, the ratio of international copper to London copper closed at 7.27 yesterday, up 0.69% from the previous day.
Overall, the biggest uncertainty facing the current copper market is the outcome of the TC long-term contract negotiations, and the Fed's rate cut expectations and the recovery of mine supply also make the market's supply and demand dynamics more complex. As the year-end approaches, the market supply and demand may retreat, and the Shanghai copper price is expected to maintain a pattern of fluctuating consolidation, requiring investors to closely monitor short-term market changes.
