Copper: Overnight, the main Shanghai copper contract fell over 1% to 87,270 yuan, while LME copper retreated to the lower end of the $11,000 mark. Macroeconomic neutral. The meeting between the leaders of China and the United States released positive signals, and progress was made in the Kuala Lumpur trade negotiations, including the US canceling the fentanyl tariff on China and extending the suspension of the 24% reciprocal tariff on China. The positive impact of reduced tariff risks has been realized, and coupled with Powell's indication that there will be no rate cut in December, market sentiment cooled. Fundamentals neutral. Yesterday, Shanghai Futures Exchange copper warehouse receipts increased by 1,692 tons to 37,000 tons, while LME copper inventory decreased by 400 tons to 135,000 tons. The CSPT third-quarter meeting reached a consensus, including a firm opposition to using the Trade River Smelter Average Index (TSI) as the pricing method, and attention should be paid to the changes and results of the long-term contract BM system next year. According to Bloomberg, the Panamanian president said that First Quantum acknowledges that the Cobre copper mine resources belong to Panama and believes that the tension in the negotiations is likely to ease. Overall, the easing of tariff risks and the release of the 15th Five-Year Plan recommendations are among the macroeconomic positives that have gradually materialized. Meanwhile, downward revisions to interest rate cut expectations and negative feedback effects on industrial demand are dragging down copper prices. Recent copper prices are in line with our prediction of a pullback after a surge, and we expect prices to fluctuate weakly in the short term. Today, the main Shanghai copper contract is expected to trade between 86,700 and 87,800 yuan/ton. Strategically, short-term trading should focus on the range, while medium- to long-term positions should consider buying on dips after further pullbacks.


Stock Index Futures: On the previous trading day, the Shanghai Composite Index fell 0.73%, the Shenzhen Component Index fell 1.16%, the ChiNext Index fell 1.84%, the STAR Market 50 Index fell 1.87%, the CSI 300 Index fell 0.80%, the SSE 50 Index fell 0.54%, the CSI 500 Index fell 1.27%, and the CSI 1000 Index fell 1.11%. The total turnover of the two markets was 2,421.677 billion yuan, an increase of approximately 165.647 billion yuan compared to the previous trading day. Among the Shenwan Level 1 industries, the best performing industries were: Steel (0.90%), Non-ferrous Metals (0.79%), and Public Utilities (0.13%). The worst performing industries were: Telecommunications (-2.83%), Electronics (-2.23%), and Defense & Military (-1.95%). Regarding basis, the basis of all four major stock indices weakened slightly. The annualized basis rates for the IH and IF quarterly contracts were 0.00% and -2.60% respectively, while the annualized basis rates for the IC and IM quarterly contracts were -8.70% and -11.40% respectively. For hedging, short positions could consider quarterly contracts. On the previous trading day, the Shanghai and Shenzhen stock markets opened slightly lower and then weakened throughout the day, both closing with moderate declines. Trading volume in both markets increased slightly compared to the previous trading day. Looking at the performance of primary industries, steel, non-ferrous metals, and utilities led the gains, while communications, electronics, and defense industries led the declines. Overall, market funds tended towards structural adjustments, with most sectors experiencing pullbacks except for some concept stocks. In terms of indices, the SSE 50 index significantly outperformed the other three major indices yesterday, possibly due to short-term fund adjustments. Yesterday, the leaders of China and the United States completed their meeting in South Korea, achieving phased results on various issues of mutual concern, which is conducive to enhancing the stability of Sino-US and international trade and boosting market confidence. Meanwhile, listed companies are gradually releasing their third-quarter financial statements. Judging from the profit growth rate of industrial enterprises, the profitability of listed companies is expected to improve. It is recommended to maintain long positions in IC and IM.

Stock Index Options: On the previous trading day, the Shanghai Composite Index fell 0.73%, the Shenzhen Component Index fell 1.16%, the ChiNext Index fell 1.84%, the STAR Market 50 Index fell 1.87%, the CSI 300 Index fell 0.8%, the SSE 50 Index fell 0.54%, the CSI 500 Index fell 1.27%, the CSI 1000 Index fell 1.11%, and the SZSE 100 ETF fell 1.41%. The total turnover of the two markets was 2,421.677 billion yuan, an increase of approximately 165.6 billion yuan from the previous trading day. Among the Shenwan Level 1 industries, the best performing industries were: Steel (0.9%), Non-ferrous Metals (0.79%), and Utilities (0.13%). The worst performing industries were: Defense and Military Industry (-1.95%), Electronics (-2.23%), and Communications (-2.83%). Market risk appetite has clearly recovered in the past week, and the stock index rebounded rapidly to a new high before adjusting yesterday. In the medium to long term, supported by policy and capital flows, A-shares are likely to continue their slow and steady bull market. Furthermore, if policy support intensifies and fundamentals improve, the stock index has ample room for further upward movement, and the market is likely to experience a gradual, upward-trending, oscillating upward movement in the long term. In the short term, the index may consolidate; holding long positions in stock index futures combined with a collar strategy for hedging could be considered.

Treasury Bond Futures: On Thursday, treasury bond futures diverged. In terms of unilateral trading, based on closing prices, the 30-year main contract rose 0.19%, the 10-year main contract rose 0.05%, the 5-year main contract remained unchanged, and the 2-year main contract fell 0.01%. The yield on the most actively traded 30-year treasury bond fell 1.3bp to 2.163%, the yield on the most actively traded 10-year treasury bond fell 1.05bp to 1.33%, and the yield on the most actively traded 2-year treasury bond remained unchanged. Regarding cross-product spreads, the spreads for 4TS-T, 2TF-T, and 3T-TL changed by -0.09 yuan, -0.04 yuan, and -0.07 yuan, respectively. Unilateral Strategy: Treasury bond futures continued to diverge, unlike the previous day, exhibiting a characteristic of long-term bonds being stronger than short-term bonds. TL showed a negative correlation with the equity market, while TS was influenced by liquidity expectations. Looking ahead, we believe that bond market pricing will return to fundamentals, and under the expectation of loose monetary policy, we recommend holding long positions in TS. Cross-product strategy: We recommend holding a long-short (TS) and long-term (T) arbitrage strategy. With expectations of ample liquidity, short-term bonds may show greater resilience. Hedging strategy: The T net basis is fluctuating at low levels, and the overall level is not high. We recommend continuing to hold a long T basis portfolio.

Ferroalloys: Following the high-level meeting between China and the US and a reduction in export tariffs, the market outlook is now largely driven by industry-specific factors after the macroeconomic benefits have been priced in. Steel mills are experiencing reduced production intensity due to environmental and other factors, primarily relying on on-demand procurement. Ferroalloy production is normal, with output remaining high. Manganese silicon plants are facing significant inventory pressure, while ferrosilicon is relatively stable. The fundamentals of iron remain stronger than those of silicon manganese. Cost support is generally strong, with futures prices approaching warehouse receipt costs, making futures hedging more attractive than spot sales. Overall, while ferroalloys are undervalued, upward momentum is weak, and the recent rebound may encounter resistance. Recommendation: Remain on the sidelines for the January futures contract; continue holding out-of-the-money put options for the December contract.

Rebar: With the release of the "15th Five-Year Plan" recommendations and the conclusion of the meeting between the Chinese and US leaders, macroeconomic expectations have temporarily been realized. The next window of opportunity for economic policy maneuvering lies in the Central Economic Work Conference in December. In terms of industry, rebar production increased by 55,200 tons to 2,125,900 tons this week, while social inventory decreased by 66,800 tons to 4,308,100 tons, and mill inventory decreased by 129,200 tons to 1,717,100 tons. Apparent demand rebounded by 61,900 tons compared to last week. Rebar demand is seasonally recovering, while supply is also increasing. Under this situation of both supply and demand growth, the fundamental improvement is limited, and the pressure to reduce inventory remains. The relative positive factor is cost support, and the trend is expected to continue its volatile movement.

Hot-rolled coil: This week, hot-rolled coil production increased by 11,000 tons, while inventory decreased by 83,300 tons. Surface demand rebounded by 51,600 tons to 3,318,900 tons. Short-term supply and demand pressures are high, with inventory remaining high due to the peak season. Demand is performing reasonably well, but there are underlying concerns. The fundamental fabric market is unlikely to see substantial improvement; the relative positive factor is cost support. The market is expected to continue its volatile but upward trend.

Shanghai Lead: Overnight, Shanghai lead traded sideways. From a fundamental perspective, on the supply side, the short-term boost to primary lead production was limited, and primary lead inventories at Shanghai Nonferrous Metals Market (SMM) have bottomed out. On the recycled lead side, smelter profits widened after lead price increases, but production recovery in Anhui and other regions was slow due to limited waste battery supply. With the import window reopening, some crude lead may gradually flow into the market. On the demand side, downstream enterprises' purchasing enthusiasm has not significantly increased, with most purchasing on an as-needed basis. Yesterday, social inventories declined slightly. Overall, the spot market remains tight, and lead prices are expected to fluctuate at high levels.

Shanghai Zinc: Overnight, Shanghai zinc prices fluctuated weakly. On the macro front, the outcome of the meeting between the Chinese and US leaders cooled macro sentiment somewhat. From a fundamental perspective, northern mines are about to shut down for winter stockpiling, and domestic ore treatment charges (TCs) continue to decline, with prices in regions like Henan already approaching 3000 yuan per ton delivered to the factory. On the supply side, according to BaiChuan statistics, domestic supply increased by 7800 tons month-on-month in November; on the demand side, galvanized steel and end-user demand were generally weak; the price difference between domestic and international markets continued to widen, and spot premiums remained firm, with social inventories declining slightly yesterday. Overall, the spot market performed reasonably well, but the cooling macro sentiment put downward pressure on the price level.

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