Spot Premiums Slightly Decline, SHFE Copper Fluctuates Downward [December 12 SHFE Market Closing Commentary]

SHFE copper opened slightly lower in the morning and fluctuated downward during the day, closing with a minor decline of 0.07%. Expectations for US Fed interest rate cuts have risen, and domestic copper cathode social inventory continued to decrease. However, downstream sentiment turned more cautious, spot premiums fell, and SHFE copper fluctuated downward. US November CPI rose 0.3% MoM, the largest increase since April, continuing to suggest persistent US inflation. After the data release, the market increased its bets on a small interest rate cut by the US Fed this month. On the macro front, Everbright Futures stated that the inflation data is not enough to change the US Fed's determination to cut interest rates next week. However, the market's focus is on the pace of interest rate cuts next year, which remains unclear. Attention is on the US Fed's post-meeting press conference. Domestically, the Politburo meeting reiterated a moderately loose monetary policy, proactive fiscal policy, and for the first time mentioned "strengthening extraordinary counter-cyclical adjustments," indicating the urgency to boost economic growth and giving the market significant confidence. Continued attention is on the upcoming Central Economic Work Conference. Satellite monitoring data showed that in November, global copper smelting activity increased compared to October, due to increased activity in integrated mining operations outside of China, the world's largest copper refining country. On December 12, domestic market copper cathode spot inventory was 108,200 mt, down 15,700 mt from the 5th and down 9,300 mt from the 9th. Domestic copper cathode social inventory continued its destocking trend; in the Shanghai market, inventory continued to decline mainly due to fewer domestic arrivals. Although there were arrivals of imported copper, outflows from warehouses were moderate in some warehouses during the week.