SMM Evening Comments (Nov 30): Shanghai nonferrous metals rose across the board as China says its manufacturing activity grew in November

SHANGHAI, Nov 30 (SMM) – SHFE nonferrous metals closed higher across the board on Monday November 30 as investors digested the release of China's official manufacturing Purchasing Managers' Index (PMI) for November.

Copper was the best performer with a rise of 3.72%. Aluminium advanced 2.93%, lead edged up 1.5%, tin climbed 1.17%, zinc increased 2.87% and nickel went up 0.29%.

SMM data showed that social inventories of refined zinc ingots across Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Shandong and Hebei shrank by 1,600 mt from last Friday November 27 to 170,800 mt as of Monday November 30. The stocks were down 5,300 mt from last Monday November 23.

The ferrous complex closed mixed. Hot-rolled coil advanced 1.09%, iron ore rose 1.11%, while rebar fell 0.56%.

Copper: The most-traded SHFE 2101 copper contract finished the day 3.72% higher at 57,680 yuan/mt. Open interest fell 11,643 lots to 156,000 lots.

OPEC+ Sunday informal meeting failed to reach a consensus on whether to postpone the production increase plan, but most members attending Sunday meeting supported maintaining the current production restriction measures until the first quarter, which supported oil prices to a certain extent. In addition, the US dollar index continued to fall to around 91.6, which also supported copper prices significantly.

The manufacturing PMI for November stood at 52.1%, and various sub-indixes generally improved, the manufacturing market vitality was further enhanced, and the recovery growth was obviously accelerated. The concerted efforts of domestic production and demand and the continuous fermentation of pandemic in Europe and America have led to the steady recovery of domestic import and export prosperity, and the sustained economic recovery has made copper prices surge obviously.

The OPEC semi-annual meeting, the guidelines of LME copper, and whether the contract could maintain its upward trend and reach a new high will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2101 aluminium contract finished the day 2.93% higher at 16,485 yuan/mt. Open interest rose 3,132 lots to 162,297 lots. Many northern regions have issued output control policies for the 2020-2021 heating season.

Zinc: The most-active SHFE 2101 zinc contract closed up 2.87% at 21,535 yuan/mt. Open interest rose 3,979 lots to 108,714 lots. With the deepening in winter, the contradiction at the ore end is still fermenting. In addition, social inventories keep falling slightly, and the downstream consumption shows resilience support. It is expected that the contract will continue to trade strongly tonight.

Nickel: The most-traded SHFE 2102 nickel contract ended the day 0.29% higher at 121,960 yuan/mt today. Open interest fell 16,255 lots to 166,755 lots. SHFE nickel is expected to trade between 119500-125000 yuan/mt this week.

Lead: The most-traded SHFE 2101 lead contract rose to an intraday high of 15,900 yuan/mt after opening and ended the day 1.5% higher at 15,530 yuan/mt. Open interest rose 1,385 lots to 42,404 lots. The good news of COVID-19 vaccine boosted the macro sentiment of investors, but the weak consumption on the fundamentals still brought some pressure on the rise of SHFE lead. The contract is likely to keep fluctuating at high in the near term. Whether the contract could move above 15,500 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2101 tin contract climbed to a session high of 149,490 yuan/mt and finished the day 1.17% higher at 149,220 yuan/mt today. Open interest fell 1,779 lots to 10,339 lots.