SMM Evening Comments (Dec 16): Shanghai nonferrous metals closed mostly higher following overnight bounce on Wall Street

SHANGHAI, Dec 16 (SMM) – SHFE nonferrous metals rose for the most part on Wednesday November 16 following an overnight bounce on Wall Street as optimism grew over the prospect of more stimulus.

Looking ahead, the US Federal Reserve is expected to be dovish at the end of its meeting on Wednesday stateside, though it may note a brighter long-term outlook when it releases economic forecasts due to vaccine developments.

Zinc, the best performer, rose 1.07%, copper advanced 0.52%, aluminium and tin went up 0.58%, while lead edged down 0.24% and nickel dropped 1.37%.

The ferrous complex rose across the board. Iron ore advanced 2.91%, rebar rose 3.18%, and hot-rolled coil climbed 2.22%.

Copper: The most-traded SHFE 2102 copper contract finished the day 0.52% higher at 57,940 yuan/mt. Open interest rose 5,929 lots to 100,286 lots.

Negotiations on the US stimulus bill have dawned, and Senate Republican leader McConnell said that Congress will not hold a meeting until it passes the stimulus plan. In addition, FDA staff reported that Moderna's COVID-19 vaccine is safe and effective, and the advantage of COVID-19 vaccine is that the market's confidence in the recovery of short-and medium-term economic activities has improved.

After twice carrying out MLF operations in November, The People's Bank of China (PBOC) continued to carry out large-scale MLF operations in December, highlighting its care for the fund at the end of the year. PBOC carried out MLF operations of RMB 950 billion at one time, and the scale of single operation reached the highest record ever. The US dollar index continued to fluctuate at low, which also significantly supported copper prices.

The trend of LME copper, German preliminary manufacturing PMI for December, Eurozone initial manufacturing PMI for December and whether the contract could move above 58,000 yuan /mt will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2101 aluminium contract finished the day 0.58% higher at 16,370 yuan/mt. Open interest fell 5,778 lots to 112,974 lots.

Zinc: The most-active SHFE 2101 zinc contract closed up 1.07% at 21,645 yuan/mt. Open interest fell 390 lots to 74,800 lots. The good news of the US stimulus bill boosted the market sentiment. Downstream are unwilling to restock due to high prices, and the premium of zinc ingots in the three places is low, which is likely to suppress upward space of zinc prices. It is expected that the contract will keep fluctuating tonight.

Nickel: The most-traded SHFE 2102 nickel contract ended the day 1.37% lower at 129,370 yuan/mt today. Open interest fell 18,094 lots to 159,593 lots.

Lead: The most-traded SHFE 2101 lead contract rose to an intraday high of 14,780 yuan/mt and ended the day 0.24% lower at 14,680 yuan/mt. Open interest fell 1,385 lots to 33,418 lots. Downstream restocked at low prices amid improved consumption, and the cost of secondary lead is unlikely to fall, supporting lead prices. It is expected that the contract will stop falling in the near term. Whether the contract could remain above 14,500 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2102 tin contract fell to a session low of 151,750 yuan/mt and finished the day 0.58% higher at 153,490 yuan/mt today. Open interest rose 1,437 lots to 32,894 lots. Improving macroeconomic data and tight fundamentals of the tin market gave certain support. The contract is likely to tentatively rise in the near term. Pressure above will be seen from 155,000 yuan/mt today. Support below will be seen from 150,000 yuan/mt today.