SHANGHAI, Dec 13 (SMM) – Shanghai base metals basically trended lower after the inflationary pressures increased due to surging US CPI. Meanwhile, their counterparts on LME trended mixed.
LME metals all closed lower in the trading last Friday except for lead. Copper dropped 1.01%, aluminium fell 0.61%, zinc lost 0.09%, and lead rose 0.61%.
SHFE metals closed mixed in the overnight trading last Friday. Copper fell 0.13%, aluminium dropped 0.37%, nickel lost 0.6%, lead increased 1.72%, and zinc gained 0.13%.
Copper: Three-month LME copper opened at $9,561/mt last Friday night and dropped 1.01% to close at $9,454/mt after hitting the lowest point at $9,450/mt. The trading volume was 8,767 lots, and the trading volume was 264,000 lots. Three-month LME copper is expected to trade between $9,400-9,500/mt today.
The SHFE 2201 copper contract opened at 69,560 yuan/mt, hitting the highest and lowest levels at 69,660 yuan/mt and 69,230 yuan/mt respectively, and closed 0.13% lower at 69,320 yuan/mt. The trading volume was 34,000 lots, and the trading volume was 136,000 lots. SHFE copper is expected to trade between 69,000-69,600 yuan/mt today, with spot prices between a discount of 20 yuan/mt and a premium of 60 yuan/mt.
On the macro front, data released last Friday showed that consumer prices (CPI) in US rose by 6.8% year-on-year in November, the largest increase in nearly 40 years, highlighting inflationary pressures and increasing the pressure on the Fed to tighten monetary policy. The copper prices closed lower under pressure. In the spot market, the downstream users remained wait-and-see last Friday. The traders gradually accepted the prices near the flat level over futures contracts. The premiums stabilised around the flat level. The SHFE 2112 copper contract will be delivered on Wednesday, and the Backwardation between the December and January contracts may shrink, which may affect the spot premiums.
Aluminium: LME aluminium opened at $2,625/mt last Friday and closed at $2,611/mt, down $16/mt or 0.61%.
During last Friday’s night session, the most-traded SHFE 2201 aluminium contract opened at 18,825 yuan/mt, with the highest and lowest prices at 18,870 yuan/mt and 18,725 yuan/mt before closing at 18,760 yuan/mt, down 70 yuan/mt or 0.37%.
Domestic aluminium output remains low. Smelters in Inner Mongolia may reduce output during the Winter Olympics. Market volatility has declined towards the end of the year. Aluminium inventory may continue to decline, but lower costs will prevent aluminium prices from rising. As such, it is unlikely that aluminium prices will rise or fall sharply in the short term. Market needs to pay attention to the sustainability of consumption.
Lead: Three-month LME lead opened at $2,275/mt, hitting the lowest and highest points at $2,251/mt and $2,304.5/mt respectively, and closed 0.61% higher at $2,294/mt.
The most-liquid SHFE 2201 lead contract opened at 15,435 yuan/mt and hit the highest point at 15,805 yuan/mt, before closing at 15,700 yuan/mt last Friday night, up 1.72%, with open interest decreasing 3436 lots to 39,000 lots.
Zinc: Three-month LME zinc fell 0.09% to settle at $3,300/mt last Friday, with open interest decreasing 5102 lots to 262,000 lots. Zinc stocks across LME-listed warehouses gained 14,025 mt or 9.33% to 164,425 mt. LME zinc remained fluctuated. LME zinc is expected to move between $3,250-3,300/mt today.
The most-liquid SHFE 2201 zinc contract gained 0.13% to settle at 23,475 yuan/mt in last Friday, with open interest increasing 1,476 lots to 73,572 lots. The output of zinc ingots in December will be less than expected amid suspension of production on environmental protection in Guangxi. TCs continue to fall in December, and the costs at smelters remained high, which will still support zinc prices. The most-traded SHFE zinc contract is expected to move between 23,000-23,500 yuan/mt today, and spot premiums for domestic #0 Shuangyan will be seen at 120-140 yuan/mt over the January contract.
Nickel: SHFE nickel prices closed at 144,770 yuan/mt on the evening session last Friday, a drop of 870 yuan/mt or 0.6%, from the settlement price of the previous trading day. Trading volume was 101,000 lots, and open interest decreased by 6,513 lots to 157,922 lots. The output of nickel sulphate in December decreased month-on-month, and the demand for nickel has weakened. For stainless steel, the demand is weak, and the prices continued to fall, weighing on the nickel prices. SHFE nickel prices are expected to move between 140,000-148,000 yuan/mt this week and LME nickel prices will fluctuate between $19,500-20,000/mt.
Tin: The SHFE 2201 tin contract fell back during last Friday’s night session with the exit of capital. The operating rates of tin smelters in Yunnan and Jiangxi remained stable last week. The spot market remained stable. Given the stable fundamentals and lack of speculative capital, SHFE tin will remain rangebound.
