Copper: On Tuesday evening, the SHFE copper futures contract slightly retreated to 88,590 yuan, while LME copper fell to around $11,132. Macroeconomic outlook: Neutral. Trump's statement that his next Fed Chair candidate is the dovish and pro-White House Hassett has fueled expectations of further monetary easing, stabilizing copper prices. Fundamentals: Neutral. Yesterday, SHFE copper warrants decreased by 927 tons to 30,000 tons, while LME copper inventories accumulated by 2,375 tons to 161,800 tons. KK mine's 500,000-ton capacity smelter has been ignited and will begin producing anode copper by the end of the year, with mine-side copper inventories expected to decrease from 37,000 tons to 17,000 tons by 2026. In the spot market, downstream buyers remained cautious after the price correction, resulting in limited recovery. Overall, tight supply expectations are driving copper prices higher, but repeated expectations of interest rate cuts coupled with dragging downstream demand suggest that prices will likely fluctuate at high levels in the short term. Today, the main Shanghai copper futures contract is expected to trade between 88,000 and 89,500 yuan per ton. Strategically, a wait-and-see approach or trading within this range is recommended for the short term.


Stock Index Futures: On the previous trading day, the Shanghai Composite Index fell 0.42%, the Shenzhen Component Index fell 0.68%, the ChiNext Index fell 0.69%, the STAR Market 50 Index fell 1.24%, the CSI 300 Index fell 0.48%, the SSE 50 Index fell 0.51%, the CSI 500 Index fell 0.87%, and the CSI 1000 Index fell 1.00%. The total turnover of the two markets was 1,593.43 billion yuan, a decrease of approximately 280.508 billion yuan from the previous trading day. Among the Shenwan Level 1 industries, the best performing industries were: Petroleum & Petrochemicals (0.71%), Light Manufacturing (0.55%), and Household Appliances (0.43%). The worst performing industries were: Media (-1.75%), Non-ferrous Metals (-1.36%), and Computer (-1.34%). Regarding basis, the basis of all four major stock index futures weakened slightly. The annualized returns of the current quarterly contract spot-futures spread for IH and IF were 0.00% and -2.80%, respectively, while those for IC and IM were -9.00% and -12.10%. For hedging, short positions could consider quarterly contracts. Yesterday, the Shanghai and Shenzhen stock markets opened slightly lower and then trended downwards, with trading volume declining significantly again. Yesterday, sectors such as oil and petrochemicals, light manufacturing, and home appliances saw the largest gains, while media, non-ferrous metals, and computer sectors saw the largest declines. In terms of primary sectors, technology-related sectors experienced significant declines yesterday, possibly influenced by the weakening of most assets in external capital markets. Overall risk appetite declined again today, with sectors related to large-cap stocks providing some support to the index. Regarding indices, the large-cap index performed slightly better than the small-cap index yesterday, but no significant style divergence was observed. Overall, market activity remains low recently, and with most international assets exhibiting high volatility, internal risk appetite is easily suppressed by changes in external financial markets. Looking ahead, a new policy window is expected to open at the end of the fourth quarter, and market risk appetite is likely to gradually recover, boosting the index. It is recommended to maintain long positions in IF and IM.

Treasury Bond Futures: On Tuesday, treasury bond futures fell. Specifically, based on closing prices, the 30-year main contract fell 0.51%, the 10-year main contract fell 0.07%, the 5-year main contract fell 0.06%, and the 2-year main contract fell 0.02%. The yield to maturity of 30-year treasury bonds rose 1.4 basis points to 2.205%, the yield to maturity of 10-year treasury bonds rose 0.85 basis points to 1.836%, and the yield to maturity of 2-year treasury bonds remained unchanged from the previous day. Regarding cross-product spreads, the spreads for 4TS-T, 2TF-T, and 3T-TL changed by -0.055 yuan, -0.013 yuan, and 0.355 yuan, respectively. Strategy: The weakness in treasury bond futures continued, with long-term bonds underperforming short-term bonds. The central bank's net injection of 50 billion yuan in treasury bonds in November, less than market expectations, further dampened market sentiment. The official manufacturing PMI for November showed a slight recovery, in line with expectations, but did not provide new fundamental guidance for the market. Recently, volatility in treasury bond futures has declined again, trading activity has decreased, and the market lacks new information. A wait-and-see approach is recommended, focusing on the upcoming November economic data releases. Cross-product strategy: Compared to TS and TL, TF and T are more resilient; a long T/short TL strategy is recommended. Hedging strategy: The T net basis is consolidating at a low level; a continued long T basis position is recommended.

Shanghai Lead: Overnight, Shanghai lead prices fluctuated weakly. From a fundamental perspective, on the supply side, the tight supply of primary ore is unlikely to change. According to Shanghai Metals Market statistics, some domestic lead concentrate has already been pre-ordered for the first quarter, and TC (treatment charges) decreased week-on-week. Smelters in Yunnan and other regions maintained production cuts. Holders of recycled waste batteries showed a strong willingness to support prices, smelting profits improved slightly, and recycled smelters were willing to resume production, while holders were willing to sell. On the import side, some overseas crude lead gradually flowed into the market. On the demand side, major manufacturers had good orders this month, but recent high lead prices have reduced purchasing demand. Overall, the improvement in low inventory levels in November is limited, and lead prices are expected to fluctuate at high levels.

Shanghai Zinc: Overnight, Shanghai zinc prices fluctuated with a slightly stronger bias. On the macro front, Trump hinted at a potential nomination for Federal Reserve Chair, putting pressure on the dollar and creating a generally positive macro sentiment. From a fundamental perspective, domestic treatment charges (TCs) remain on a downward trend, with floor prices in some regions falling to 2000 yuan. On the supply side, according to BaiChuan YingFu statistics, smelters are expected to reduce supply by over 30,000 tons month-on-month in December, easing supply pressure. On the demand side, downstream buyers are mainly purchasing on dips, and the spot premium is under pressure after futures prices rose. Overall, the fundamentals for zinc prices are still acceptable, and prices are expected to fluctuate at high levels.

Methanol: In terms of spot prices, Daqi was 1985, Luoyang 2130, and Lubei 2220. Upstream factories performed well, while downstream demand was mainly for immediate needs, with good sales at lower prices for transferred orders. In the short term, the spot coal winter stockpiling window is expected to provide some support to the raw material side; production areas maintain high operating rates, and large-scale plants that underwent maintenance earlier are returning to operations this cycle, resulting in relatively low inventory pressure in production areas; the logistics market has fewer vehicles, and road transport prices remain high, leading to stronger prices delivered to end users; downstream high inventory continues, and attention should be paid to changes in the operating rates of olefin plants in Jiangsu and Zhejiang; overseas high shipments continue, and port inventories are unlikely to decrease in the short term; Iranian production is declining, and future shipping rates are expected to decrease to some extent. On Tuesday, the East China spot basis was 01+0, and the 12 basis was 01+20, with the far-month basis weakening slightly. In the short term, Middle East plants have a significant impact on market sentiment, and attention should be paid to their implementation; in the medium to long term, attention should be paid to Middle East weather, Southwest China gas prices, and environmental policies in production areas. In terms of trading strategy, the short-term focus is on a rebound in methanol prices. Attention should be paid to port basis and inventory changes. The reference range for methanol 2601 is 2050-2180 yuan/ton.

Urea: In terms of spot prices, the price in Shandong market is 1690 yuan/ton, and the price in Henan market is 1680 yuan/ton. New orders in the domestic urea market are performing well, and manufacturers are continuously raising their quotations, while downstream buyers are relatively cautious. On the supply side, daily urea production is approximately 199,000 tons, a slight decrease from the previous period, reducing upstream order pressure; orders for winter fertilizer in some regions are progressing, providing some support for agricultural demand; affected by export quotas and winter storage policies, inventory pressure is being released, awaiting port arrival trends; compound fertilizer plants are expected to operate at sufficient capacity, creating a certain rigid demand for raw material urea. In the short term, urea inventory is decreasing, and demand is showing some improvement, but the overall supply and demand situation remains relatively loose, with wide fluctuations expected. Attention should be paid to the reserve demand situation. Operationally, urea prices are expected to fluctuate in the short term, with the urea 2601 contract expected to fluctuate between 1620-1720 yuan/ton.

Rebar: Last week, rebar production decreased by 18,800 tons, inventory decreased by 218,600 tons, and apparent demand decreased by 28,500 tons, indicating a neutral market sentiment due to both supply and demand declines. Steel mill profits continued to decline, pig iron production decreased slightly, and while finished steel production increased slightly, supply is expected to decrease further due to the deepening off-season and production losses. Short-term demand is supported by year-end rush orders, but will weaken marginally under the off-season effect. The Central Environmental Protection Inspection Team issued a concentrated report on typical cases. Among them, the Third Central Environmental Protection Inspection Team found in Hebei Province that Tangshan City had illegally launched steel projects and added steel production capacity, and some enterprises had serious problems with illegal discharge of pollutants, indicating shortcomings in air pollution prevention and control. This intensified inspection has further deepened expectations of supply contraction, driving a rebound in rebar prices from their lows, and steel prices are expected to remain strong in the short term.

Hot-rolled coil: Last week, hot-rolled coil production increased by 30,000 tons, inventory decreased by 12,100 tons, and apparent demand decreased by 42,000 tons. During the policy lull, the supply pressure of hot-rolled coil remains unresolved. Although inventory has decreased again, the resilience of demand is questionable, limiting the extent of improvement in fundamentals. The intensified inspections have led to expectations of supply contraction, driving a rebound in rebar and hot-rolled coil prices from their lows, resulting in a short-term bullish trend for steel prices. Strategically, the short-term trading range for rebar 2601 is estimated at 3040-3200 yuan/ton; the trading range for hot-rolled coil 2601 contract is estimated at 3230-3350 yuan/ton.

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