SMM Evening Comments (Dec 2): Shanghai nonferrous metals declined for the most part, aluminium advanced 1.2%

SHANGHAI, Dec 2 (SMM) – SHFE nonferrous metals broadly fell on Wednesday December 2 after major indexes on Wall Street surged to record highs overnight.

Shanghai nonferrous metals, except for aluminium, traded lower on Wednesday December 2. Lead dropped 2.12% to lead the losses, zinc shed 1.17%, tin declined 0.34%, copper went down 0.21% and nickel fell 0.68%, while aluminium advanced 1.2%.

The ferrous complex rose across the board. Hot-rolled coil advanced 2.35%, iron ore rose 3.43%, and rebar climbed 0.54%.

Copper: The most-traded SHFE 2101 copper contract finished the day 0.21% lower at 57,200 yuan/mt. Open interest fell 2,107 lots to 136,000 lots. Market activity declined significantly, and the turnover of SHFE copper index decreased by nearly 130,000 lots.

US House Speaker Pelosi introduced the Democratic version of the new draft stimulus package, and Senate Majority Leader McConnell also began to distribute his revised stimulus package to colleagues. Biden also called on Congress to adopt a strong plan to deal with the economic crisis caused by the pandemic. The confidence of market investors was obviously boosted. In addition, the US dollar index dropped significantly at night, falling to around 91.2, constantly setting a new low for more than two years, which obviously supported copper prices.

SHFE copper ended nine consecutive days of increase and started to fall. US ADP Employment Change and whether the contract could remain above 57000 yuan/mt and maintain its upward trend will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2101 aluminium contract finished the day 1.2% higher at 16,835 yuan/mt. Open interest rose 3,396 lots to 150,076 lots.

Zinc: The most-active SHFE 2101 zinc contract closed down 1.17% at 21,160 yuan/mt. Open interest fell 3,373 lots to 94,093 lots. According to the customs data, zinc concentrate imports totalled 303,400 mt in October, up 39,000 mt from September and 53,000 mt from October 2019.

Nickel: The most-traded SHFE 2102 nickel contract ended the day 0.68% lower at 119,730 yuan/mt today. Open interest fell 2,161 lots to 151,332 lots. SMM data showed that the purchasing manager's index (PMI) for downstream nickel industries, including stainless steel, electroplating, alloy and battery, stood at 49.55 in November, down 0.13 points from a month ago. A reading below 50 indicates a contraction.

Lead: The most-traded SHFE 2101 lead contract ended the day 2.12% lower at 15,010 yuan/mt. Open interest fell 389 lots to 39,748 lots. The contract fell for two consecutive days. On the fundamentals, downstream is cautious about restocking due to the fear of the decline of lead prices. Prices of battery scrap have fallen amid tepid trade, and the cost support of secondary lead has also moved down. Whether the short positions could continue to move above 15,000 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2101 tin contract climbed to a session high of 147,420 yuan/mt and finished the day 0.26% higher at 146,380 yuan/mt today. Open interest rose 1,629 lots to 26,211 lots. Pressure above is expected to around 147,500 yuan/mt. Support below is expected to around 145,000 yuan/mt.