SMM Evening Comments (Dec 4): Shanghai nonferrous metals closed mostly higher, aluminium fell 0.82%

SHANGHAI, Dec 4 (SMM) – SHFE nonferrous metals rose for the most part on Friday December 4 after the Pentagon added more Chinese firms to a blacklist of alleged Chinese military companies.

Investors were also monitoring vaccine developments after a report said Pfizer expects to ship half the Covid-19 vaccine doses it originally planned for this year due to supply chain issues.

Tin, the best performer, rose 1.36%, zinc advanced 0.62%, copper went up 0.93% and lead gained 0.4%, while nickel edged down 0.37% and aluminium dropped 0.82%.

The ferrous complex rose across the board. Hot-rolled coil advanced 1.16%, iron ore rose 4.24%, and rebar climbed 0.13%.

Copper: The most-traded SHFE 2101 copper contract finished the day 0.93% higher at 57,450 yuan/mt. Open interest fell 1,818 lots to 129,000 lots.

The number of initial jobless claims in the US declined for the first time in three weeks. US Markit services Purchasing Managers’ Index for November stood at 58.4, a new high since March 2015, but the PMI of non-manufacturing industry dropped to a new low in half a year. Overall, overseas economic data tended to be stable and rose steadily. The US dollar index keeps hitting a new low near 90.5, which has obvious support for copper prices. OPEC+ has reached an agreement to gradually relax its efforts to reduce production next year. The pace of resumption of production is slower than expected, and there is still some control over oil prices. The probability that the two parties in the US reach a stimulus agreement quickly increases, the sentiment in the capital market is relatively stable.

The trend of LME copper, US non-farm employment for November, October retail sales and whether long positions could get a sustained boost to support copper prices will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2101 aluminium contract finished the day 0.82% lower at 16,350 yuan/mt. Open interest fell 4,002 lots to 141,881 lots.

Zinc: The most-active SHFE 2101 zinc contract climbed to an intraday high of 21,160 yuan/mt and closed up 0.62% at 21,060 yuan/mt. Open interest fell 1,242 lots to 87,817 lots. Although the spot performed weak, the decrease in social inventories highlighted the consumption resilience. In addition, there is no sign of easing the contradiction at the ore end, which still supported zinc prices. The downward space of the contract is expected to be limited. The contract is expected to trade around 21,000 yuan/mt tonight, trying to break through the five- and 10-day moving average. Nonfarm data should be monitored tonight.

Nickel: The most-traded SHFE 2102 nickel contract ended the day 0.37% lower at 117,750 yuan/mt today. Open interest fell 8,202 lots to 143,478 lots. Nickel ore inventories across all Chinese ports increased 68,000 wmt from November 27 to 9.31 million wmt as of December 4, showed SMM data.

Lead: The most-traded SHFE 2101 lead contract fell to an intraday low of 14,810 yuan/mt after opening and ended the day 0.4% higher at 14,975 yuan/mt. Open interest fell 3,536 lots to 33,777 lots. On the fundamentals, prices of battery scrap are unlikely to fall, and the cost of secondary lead provides certain support. Whether the contract could move above 15,000 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2101 tin contract climbed to a session high of 148,060 yuan/mt and finished the day 1.36% higher at 147,940 yuan/mt today. Open interest rose 674 lots to 27,954 lots.