SMM Morning Comments (Dec 21): Base Metals Closed Mixed Overnight on Falling US Dollars and Surging Omicron Cases

Telah Terbit: Dec 21, 2021 10:02 (GMT+8)
Shanghai base metals trended mixed on Tuesday morning after the US $1.75 trillion investment bill was blocked. Meanwhile, their counterparts on LME mostly went up.

SHANGHAI, Dec 21 (SMM) – Shanghai base metals trended mixed on Tuesday morning after the US $1.75 trillion investment bill was blocked. Meanwhile, their counterparts on LME mostly went up.

LME metals closed mixed in the trading on Monday. Copper rose 0.14%, lead went up 0.2%, aluminium fell 2.68%, and zinc fell 1.15%.

SHFE metals also closed mixed overnight. Copper rose 0.09%, lead increased 0.2%, aluminium gained 0.89%, zinc fell 1.59%, and nickel lost 1.62%.

Copper: Three-month LME copper opened at $9,402/mt last night, hitting the highest level at $9,471/mt, and closed at $9,459.5/mt, up 0.14%. The trading volume was 6,077 lots, and the open interest stood at 249,000 lots. LME copper is expected to trade between $9,400-9,500 yuan/mt today,

The SHFE 2202 copper contract opened at 68,690 yuan/mt on Monday night, hitting the highest point at 69,130 yuan/mt, and closed at 68,940 yuan/mt, up 0.09%. The trading volume was 39,000 lots, and the open interest reached 136,000 lots. SHFE copper is expected to trade between 68,700-69,300 yuan/mt today, with spot premiums between 150-260 yuan/mt.

The US dollar index fell sharply after the $1.75 trillion investment bill was blocked, boosting the copper futures to rebound. But at the same time, the cases of Omicron infections surged in many countries, and the market sentiments were suppressed. The copper prices rose limitedly. The spot prices fell slightly yesterday, but the downstream purchases did not improve significantly due to the pandemic. Only a few transactions were made on rigid demand.

Aluminium: The most-liquid SHFE 2201 aluminium contract fell 0.89% to settle at 19,535 yuan/mt overnigh. Three-month LME aluminium fell 2.58% to settle at $2,663/mt yesterday.

Lead: Three-month LME lead opened at $2,305/mt overnight, hitting the lowest and highest points at $2,268.5/mt and $2,310.5/mt respectively, and closed at $2,308/mt, up $4.5/mt or 0.2%.

The SHFE lead opened at 15,445 yuan/mt on Monday night, hitting the lowest and highest prices at 15,440 yuan/mt and 15,575 yuan/mt respectively, and closed at 15,545 yuan/mt, up 35 yuan/mt or 0.35%.

Zinc: Three-month LME zinc fell 1.15% to settle at $3,342/mt overnight, with open interest decreasing 117 lots to 246,000 lots. Zinc stocks across LME-listed warehouses dropped by 875 mt or 0.43% to 204,650 mt. The worsening COVID-19 pandemic pushed down LME zinc prices. The energy shortages in Europe remain as the market focus. LME zinc is expected to move between $3,310-3,360/mt.

The most-liquid SHFE 2202 zinc contract fell 1.59% to settle at 23,480 yuan/mt, with open interest increasing 2,010 lots to 81,335 lots. On the supply side, the imports of refined zinc in November stood at 21,000 mt, a year-on-year decrease of 66.4%. The imports of zinc ingots were far less than expected. On the consumer side, environmental protection warnings were frequently issued in places such as Tangshan, Hebei and Baoding, which suppresses the operating rates of galvanising companies. Although zinc prices dropped yesterday, the price was still high, and the overall transaction was weak. The most-traded zinc contract is expected to move between 23,400-23,900 yuan/mt today and #0 domestic Shuangyan zinc may trade at premiums of 40-50 yuan/mt over the January contract.

Nickel: SHFE 2202 nickel contract fell 1.62% or 2,340 yuan/mt to end at 142,550 yuan/mt last night. The trading volume was 99,000 lots. Open interest stood at 142,000 lots. It is expected the nickel prices will remain weak and stable today. From the perspective of supply and demand, the supply of primary nickel is currently ample as the supply tightness of the second-grade nickel (NPI) turned into an accumulation of stocks with weakening purchases by stainless steel mills. The current supply of nickel plates is tight while the supply of nickel briquette is ample. The purchase demand from the downstream alloys is acceptable, while the purchases by stainless steel mills is moderate. The key downstream buyers of nickel briquette are nickel sulphate plants using dissolution method. The precursors plants need to reduce inventories, and the inventories have been built until January next year. Therefore, the raw material demand slid. In summary, the demand is weak. SMM believes that the nickel prices will remain weak.

Tin: The overall quotations of smelters did not change much. The shipments of traders were muted while the overall transactions did not change much. Downstream producers restocked on demand. The market was still based on fixed-price quotations as the main yesterday, supplemented by premium and discount quotations. The supply of Yunxi thinned. Spot premiums stood at 9,600-10,600 yuan/mt over the January contract. Premiums quotations will stabilise. The mainstream spot transaction prices are expected to move between 293,000-295,000 yuan/mt.

Pernyataan Sumber Data: Kecuali informasi yang tersedia untuk publik, semua data lainnya diproses oleh SMM berdasarkan informasi publik, komunikasi pasar, dan mengandalkan model database internal SMM. Hanya untuk referensi dan tidak menjadi rekomendasi pengambilan keputusan.

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