SMM Evening Comments (Dec 8): Shanghai nonferrous metals closed mostly higher as investors remained cautious over post-Brexit trade deal

SHANGHAI, Dec 8 (SMM) – SHFE nonferrous metals rose for the most part on Tuesday December 8 as investors remained cautious over rising coronavirus cases, U.S. stimulus negotiations as well as Brexit talks between the U.K. and the European Union.

The U.K. and the European Union are making last efforts to reach a post-Brexit trade deal this week. Both sides remain divided over three issues: fisheries, competition rules and governance of their potential deal. They have been stuck on these three areas since early summer.

Lead, the best performer, rose 2.03%, zinc advanced 1.87%, nickel went up 1.66% and tin gained 0.93%, while copper edged down 0.72% and aluminium dropped 1.02%.

A total of 82 vessels carrying 13.15 million mt of iron ore arrived at major Chinese ports during November 29-December 5, SMM estimates. This was down 1.48 million mt from the previous week but up 540,000 mt from the same period last year.

The ferrous complex closed mixed. Rebar advanced 1.03%, iron ore rose 0.77%, while hot-rolled coil fell 0.09%.

Copper: The most-traded SHFE 2101 copper contract finished the day 0.72% lower at 56,930 yuan/mt. Open interest fell 6,074 lots to 115,000 lots.

The pandemic continued to ferment, the number of newly added COVID-19 deaths in a single day in the US tied the peak in April, and the number of hospitalizations continued to increase. As of yesterday, there were 14.72 million confirmed cases of the COVID-19 in the US, and 280,000 deaths. In addition, the negotiation between the two parties in the US on the comprehensive government expenditure bill and the pandemic relief bill made difficult progress, and the macro optimism cooled down, so copper prices were obviously under pressure. The US dollar index rose to 90.8, and long positions left the market obviously, which also limited the space for copper contracts to rise to a certain extent.

The trend of LME copper, ZEW Economic Sentiment Index in Germany for December and whether the contract could move above 57,000 yuan /mt will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2101 aluminium contract finished the day 1.02% lower at 16,070 yuan/mt. Open interest fell 1,719 lots to 133,101 lots.

Zinc: The most-active SHFE 2101 zinc contract closed up 1.87% at 21,275 yuan/mt. Open interest rose 5,353 lots to 92,051 lots. China's refined zinc output stood at 562,300 mt in November, falling 6,800 mt or down 1.22% on month and up 5.94% on year. For January-November, output totalled 5.55 million mt, up 4.57% from the same period last year. Zinc smelters produced 81,800 mt of zinc alloy in November, flat from the previous month.

Nickel: The most-traded SHFE 2102 nickel contract ended the day 1.66% higher at 121,490 yuan/mt today. Open interest rose 1,728 lots to 148,969 lots. China's refined nickel output rose 11.56% or 1,416 mt from October, but shrank 2.73% from a year earlier, to 13,700 mt in November.

Lead: The most-traded SHFE 2101 lead contract rose to an intraday high of 15,105 yuan/mt in afternoon trading and ended the day 2.03% higher at 15,060 yuan/mt. Open interest fell 3,258 lots to 31,896 lots. The downstream is cautious about restocking amid weak consumption, secondary lead discount is expanding, and the upward pressure on the contract is still relatively large. Whether the contract could remain above 20-day moving average of 15,000 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2102 tin contract climbed to a session high of 150,140 yuan/mt in afternoon trading and finished the day 0.93% higher at 149,400 yuan/mt today. Open interest rose 1,724 lots to 30,289 lots. Whether the contract could move above 150,000 yuan/mt will be monitored. SMM data showed that China produced 13,937 mt of refined tin in November, down 5.75% from October.