1、 Macro aspect

1.1 Domestic aspects

1.1.1 The General Administration of Customs announced that the total import and export value of China's goods trade in October was 3.54 trillion yuan, with a monthly growth rate of 0.9% instead of the recent year-on-year decline. In the first ten months, China's total import and export value of goods trade was 34.32 trillion yuan. Growth and increase in the proportion of general trade imports and exports; The export of electromechanical products reached 11.43 trillion yuan, an increase of 2.8%; Total imports and exports to countries jointly building the "the Belt and Road" totaled 15.96 trillion yuan, up 3.2%.

According to data released by the National Bureau of Statistics, the total retail sales of consumer goods in China in October increased by 7.6% year-on-year, exceeding the expected value of 7% and the previous value of 5.5%, and marking the third consecutive month of recovery! In October, the total retail sales of consumer goods reached 4333.3 billion yuan, a year-on-year increase of 7.6%. Among them, the retail sales of consumer goods other than automobiles reached 3919.8 billion yuan, an increase of 7.2%. From January to October, the total retail sales of consumer goods reached 3.8544 trillion yuan, a year-on-year increase of 6.9%. Among them, the retail sales of consumer goods other than automobiles reached 34647.2 billion yuan, an increase of 7.0%.

According to data released by the National Bureau of Statistics, China's official manufacturing PMI for November was 49.4, lower than the previous value of 49.5; Non manufacturing PMI50.2, lower than the previous value of 50.6. The manufacturing PMI in China remained in a contraction range for the second consecutive month in November, and the contraction speed accelerated. The non manufacturing PMI is still in an expansion range, but the expansion speed continues to slow down compared to last month. Zhao Qinghe, senior statistician at the Service Industry Survey Center of the National Bureau of Statistics, interpreted that due to factors such as some manufacturing industries entering the traditional off-season and insufficient market demand, the manufacturing PMI was slightly lower than last month by 0.1 percentage points. Affected by factors such as the fading of holiday effects, the business activity index of the service industry was 49.3%, a decrease of 0.8 percentage points from last month, and the market activity of the service industry has declined to some extent.

1.2 International aspects

1.2.1 US inflation continued to cool down in October, and consumer spending slowed down, indicating that the economy is entering a low-speed growth stage, consolidating expectations of the Federal Reserve's interest rate cuts. On Thursday, November 30th, the latest data from the US Department of Commerce showed that the year-on-year growth rate of the core PCE price index excluding food and energy in October fell from 3.7% in September to 3.5%, which is in line with market expectations; The month on month growth was 0.2%, slowing down from the previous value of 0.3%, consistent with market expectations. Due to the decline in energy prices, the PCE (Personal Consumption Expenditures) price index in the United States in October was 3% year-on-year, the smallest increase since March 2021, and lower than the market expectation of 3.1%; The month on month growth rate was 0%, which also exceeded expectations and slowed down. The Federal Reserve closely monitors service sector inflation, excluding housing and energy, which rose 0.1% month on month, also the smallest increase so far this year.

Moody's has downgraded its outlook for the US credit rating from "stable" to "negative" due to a significant increase in interest costs on US Treasury debt and "deep-rooted political polarization". Analysis suggests that Moody's threat to downgrade the US bond rating will continue to lead the market towards the end of the trading rate hike cycle, and economic momentum will slow down with fiscal constraints. Credit damage means that the US dollar may become the most direct victim of a rating downgrade.

1.2.3 The service sector PMI in the Eurozone rose slightly to 48.2 in November, but it is still in a contraction range, and signs of economic recession are increasing. Although the PMI index rose 0.7 points to 43.8, it did not show any hope of improvement in the industrial sector. Bert Colijn, an economist at Dutch International Bank, said that the eurozone has not fallen into a deep recession, but the magnitude of the economic rebound is also not significant. The November PMI data for the Eurozone shows a slight increase in economic activity, but it is still in a contraction range. Inflation pressure is easing, but it has not been completely eliminated, and employment prospects continue to deteriorate. This confirms a viewpoint that the current economic downturn has not worsened, but there are also almost no signs of recovery. Overall, this seems to be a shallow technological decline.

2、 Market Review

In November, copper prices reversed expectations of a weak off-season and continued to rise, hitting near monthly highs. The highest price for Shanghai copper is 68550 yuan/ton. The lowest price was 66720 yuan/ton, and the Shanghai copper main 2401 contract closed at 68220 yuan/ton at the end of the month, with a monthly increase of 1.17% or 790 yuan/ton.

In terms of spot goods, the average price of Changjiang Spot 1 # copper at the beginning of the month (November 1st) was 67570 yuan/ton. As of November 30th, the average price of Changjiang Spot 1 # copper was 68920 yuan/ton, with a price increase of 1350 yuan, or about 2.0%.

Within the month, the macro outlook turned positive, with the US non farm payroll data plummeting, CPI and PPI slowing down beyond expectations, labor market and inflation data both declining, leading the market to no longer support further interest rate hikes. Despite frequent hawkish comments from Federal Reserve officials to ease the risks brought about by the turning point of monetary policy, the US dollar index has been declining steadily, plummeting from a high of 107 to 103, with a cumulative decline of over 3% in November, releasing the pressure on London copper in recent times.

Fundamentally, what exceeded expectations was the particularly tight supply in the electrolytic copper market in November, with low domestic inventory and high prices for spot copper market holders, resulting in sustained high demand. Downstream demand was forced to buy at high prices, and the trading atmosphere gradually cooled down with the rise of the market. The downstream off-season in December will become more apparent, and the short-term supply-demand imbalance has not provided significant upward momentum for copper prices. The upward space in this round is expected to be limited, and attention should be paid to the digestion of macroeconomic benefits, with the probability of rising and falling gradually increasing.

3、 Waste market

Due to the limited supply of scrap copper in the market in November, the processing output of recycled copper rods has decreased, causing some manufacturers to reduce production. However, the overall output is still good, and it is gradually entering the off-season of the market, resulting in a decrease in downstream demand for copper rods.

In terms of scrap brass, upstream holders are currently in a wait-and-see state, actively searching for sources to replenish inventory, but with little effect. Most of them are sporadic loose goods, and a few with overseas channels can still ensure a certain source of supply. However, the current price is difficult to encourage them to sell their spot goods.

Copper prices have rebounded, and market trading sentiment has cooled down. The activity of upstream traders is relatively low, and their willingness to buy is average. Except for a few short sellers and speculators who are active, they mostly maintain a wait-and-see state. Downstream manufacturers have a weak willingness to increase prices and purchase goods due to the copper price correction, tightening of available supply in the market, and firm spot prices of scrap copper. As a result, finished product orders have performed poorly, leading to poor transaction performance.

4、 Inventory aspect

Recently, the copper inventory in the previous period decreased by 5400 tons compared to the end of October, and the overall inventory level remained low; The accumulation process of LME copper inventory has significantly weakened. As of November 21, LME copper inventory has increased by 3500 tons to 180000 tons compared to the end of October, and the potential for further inventory increase is expected to be relatively limited; COMEX copper storage experienced a slight decrease during November, and by the end of the month it had dropped to below 20000 tons.

Overall, the market pressure caused by the accumulation of stock on the exchange has been further alleviated. Industry insiders say that the continuous accumulation of refined copper inventory on the London Metal Exchange since August directly reflects the reality of significantly weaker overseas demand during peak seasons. In contrast, the domestic social inventory continues to show a downward trend, which is an important support for the demand side on the global balance sheet. From a data perspective, the current fundamentals of copper in China are undoubtedly stronger than those overseas.