SMM Evening Comments (Dec 7): Shanghai nonferrous metals ended mixed, nickel rose 2.91%

SHANGHAI, Dec 7 (SMM) – SHFE nonferrous metals closed mixed on Monday December 7. Investor sentiment improved last week around coronavirus vaccine rollouts and U.S. stimulus hopes, which fueled a record-setting session Friday on Wall Street.

Nickel, the best performer, rose 2.91%, zinc advanced 0.41% and tin climbed 1.3%, while aluminium edged down 0.65%, lead weakened 1.24% and copper shed 0.26%.

SMM data showed that social inventories of refined zinc ingots across Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Shandong and Hebei decreased 1,600 mt from last Friday December 4 to 165,100 mt as of Monday December 7. The stocks were down 5,700 mt from last Monday November 30.

The ferrous complex rose across the board. Iron ore increased 1.57%, rebar rose 2.55%, and hot-rolled coil climbed 2.12%.

Copper: The most-traded SHFE 2101 copper contract finished the day 0.26% lower at 57,030 yuan/mt. Open interest fell 7,440 lots to 121,000 lots.

November Non-farm payrolls only increased 245,000, far below the median estimate of 460,000 by economists. The number of unemployed people increased with the second outbreak of the pandemic, and the COVID-19 hit the employment situation obviously. The overall situation remained grim. However, the negotiation of the fiscal stimulus plan between the two parties in the US is gaining momentum, but there are still differences on the specific details, and the market remains optimistic to a certain extent, hoping for the upcoming bill. In addition, the vaccine developed by Pfizer Pharmaceuticals will be put on the market soon, which will slow down the pessimism in the market. The US dollar index is still on the downward track, fluctuating around 90.6, so support below of copper prices is seen from 57,000 yuan/mt.

The trend of LME copper, China's foreign exchange reserves, Balance of trade for November and whether the contract could remain above 57,000 yuan /mt and five-day moving average will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2101 aluminium contract finished the day 0.65% lower at 16,075 yuan/mt. Open interest fell 7,061 lots to 134,820 lots.

Zinc: The most-active SHFE 2101 zinc contract climbed to an intraday high of 21,060 yuan/mt and closed up 0.41% at 21,045 yuan/mt. Open interest fell 1,119 lots to 86,698 lots. Zinc inventories in China fell over the weekend, primarily propelled by a decrease in Shanghai and Guangdong.

Nickel: The most-traded SHFE 2102 nickel contract ended the day 2.91% higher at 120,990 yuan/mt today. Open interest rose 3,763 lots to 147,241 lots. SHFE nickel is expected to trade between 116000-121000 yuan/mt this week. LME nickel is expected to trade between $15800-16350/mt this week.

Lead: The most-traded SHFE 2101 lead contract fell to an intraday low of 14,705 yuan/mt after opening and ended the day 1.24% lower at 14,755 yuan/mt. Open interest rose 1,377 lots to 35,154 lots. Although the spot market discount narrowed slightly, the downstream trading only improved in some areas, and still did not get out of the trend of weak fundamentals. Prices of battery scrap fell, and the support of the cost of secondary lead moved downward. Whether the contract could move above 14,700 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2102 tin contract climbed to a session high of 148,980 yuan/mt and finished the day 0.59% higher at 148,820 yuan/mt today. Open interest rose 611 lots to 28,565 lots. Driven by the weak US dollar and the rise of LME tin, the contract is expected to test pressure from 150,000 yuan/mt. It is expected to trade robustly in the near term.