SMM Evening Comments (Dec 14): Shanghai nonferrous metals declined for the most part, nickel advanced 1.64%

SHANGHAI, Dec 14 (SMM) – SHFE nonferrous metals broadly fell on Monday December 14 as investors reacted to the approval of Pfizer’s Covid-19 vaccine.

Shanghai nonferrous metals, except for nickel, traded lower on Monday December 14. Zinc dropped 1.68% to lead the losses, lead shed 0.27%, tin declined 0.19%, copper went down 0.52% and aluminium fell 0.43%, while nickel advanced 1.64%.

The ferrous complex fell across the board. Hot-rolled coil went down 1.77%, iron ore shed 3.21%, and rebar fell 2.92%.

Copper: The most-traded SHFE 2101 copper contract finished the day 0.52% lower at 57,850 yuan/mt. Open interest fell 4,188 lots to 98,000 lots.

U.S. Treasury Secretary Mnuchin said he was cautious about reaching a stimulus plan, after the Democratic Party said that the White House's $916 billion proposal did not supplement unemployment benefits, which made them unacceptable. Senate Majority Leader McConnell attacked the Democratic Party's resistance. The market is worried about the delay of the US fiscal stimulus bill, and its liquidity expectations are relatively conservative. Moreover, it is more and more possible for Britain to leave the EU without reaching an agreement, and the market preference has declined. However, the US dollar index once again gapped and opened lower to around 90.7. In addition, the US approved the emergency use of Pfizer COVID-19 vaccine, and vaccination may start on Monday. It is estimated that the vaccination rate will be as high as 80% by next summer, which makes the overall risk aversion weaker and the low support is obvious.

Eurozone industrial output for October, the guidance of LME copper and whether the contract could move above 58000 yuan/mt again and maintain its upward trend will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2101 aluminium contract finished the day 0.43% lower at 16,315 yuan/mt. Open interest fell 949 lots to 123,833 lots. Prices of secondary aluminium remained relatively stable amid slower increase in aluminium prices.

Zinc: The most-active SHFE 2101 zinc contract closed down 1.68% at 21,350 yuan/mt. Open interest fell 5,321 lots to 80,041 lots. SMM data showed that social inventories of refined zinc ingots across Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Shandong and Hebei expanded by 4,500 mt from last Friday December 11 to 163,100 mt as of Monday December 14. The stocks were down 2,000 mt from last Monday December 7.

Nickel: The most-traded SHFE 2102 nickel contract ended the day 1.64% higher at 130,930 yuan/mt today. Open interest rose 3,206 lots to 174,599 lots. Output of refined nickel totalled 13,700 mt in November, and smelters remained stable production schedules at year-end.

Lead: The most-traded SHFE 2101 lead contract rose to an intraday of 15,030 yuan/mt and ended the day 0.27% lower at 14,960 yuan/mt. Open interest fell 2,881 lots to 32,470 lots. Spot lead prices fell and lead prices rose, which stimulated the downstream restocking, and the primary and secondary lead discounts both narrowed, giving lead prices certain support. It is expected that SHFE lead prices will remain firm before delivery. The pressure from five- and 10-day moving average will be monitored tonight.

Tin: The most-liquid SHFE 2101 tin contract climbed to a session high of 152,030 yuan/mt and finished the day 0.19% lower at 150,670 yuan/mt today. Open interest fell 907 lots to 31,627 lots. Pressure above will be seen from 153,000 yuan/mt. Support below will be seen from 148,500 yuan/mt. The contract is expected to fluctuate in the near term.