SMM Evening Comments (Dec 21): Shanghai nonferrous metals ended mixed, aluminium fell 2.34%

Published: Dec 21, 2020 18:00 (GMT+8)

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SHFE nonferrous metals closed mixed on Monday December 21 as the coronavirus situation in parts of North Asia remains serious.

SHANGHAI, Dec 21 (SMM) – SHFE nonferrous metals closed mixed on Monday December 21 as the coronavirus situation in parts of North Asia remains serious.

China on Monday kept its Loan Prime Rates unchanged, in line with expectations from analysts and traders in a recent poll. The one-year and five-year LPR were kept at 3.85% and 4.65%, respectively.

Nickel, the best performer, rose 1.72%, copper advanced 0.27% and zinc went up 1.42%, while aluminium edged down 2.34%, tin fell 1.65% and lead weakened 2.02%.

SMM data showed that social inventories of refined zinc ingots across Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Shandong and Hebei decreased 500 mt from last Friday December 18 to 154,000 mt as of Monday December 21. The stocks were down 9,100 mt from last Monday December 14.

The ferrous complex rose across the board. Iron ore surged 9.68%, rebar rose 4.99%, and hot-rolled coil climbed 4.98%.

Copper: The most-traded SHFE 2102 copper contract closed up 0.27% at 59,280 yuan/mt. Open interest rose 7,976 lots to 126,000 lots.

New strains of COVID-19 appeared in England, and the comprehensive blockade in London and other regions to curb the runaway new strains led to the suspension of British flights in many European countries. The market is once again pessimistic about the COVID-19 outbreak. However, the news of the stimulus is positive, and McConnell, the majority leader of the US Senate, said that he had reached an agreement with the Democratic leaders on the nearly $900 billion anti-pandemic relief plan. In addition, Trump signed the expediency spending bill last Friday to keep the federal government running. The continuous monetary easing policy keeps investors in the capital market confident in the near term.

The Central Economic Work Conference, which closed on Friday in China, set the tone for next year, requiring a prudent monetary policy to be flexible, precise, reasonable and moderate, and a proactive fiscal policy to improve quality, efficiency and sustainability. Macroeconomic policies should maintain the necessary support for economic recovery, and do not make sharp turns. It can be seen that under the tone of domestic stable monetary policy next year, the economy will recover in an orderly manner.

Euro zone consumer confidence for December, the specific landing of the US stimulus bill and whether long positions could move above 60,000 yuan/mt will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2101 aluminium contract finished the day 2.34% lower at 16,280 yuan/mt. Open interest fell 16,275 lots to 97,601 lots.

Zinc: The most-active SHFE 2102 zinc contract rose to an intraday high of 22,315 yuan/mt in afternoon trading and finished the day 1.42 higher at 22,180 yuan/mt. Open interest rose 18,998 lots to 97,500 lots.The US stimulus bill reached a consensus over weekend, but its stimulus scale was smaller than the market expectation. The British pandemic has mutated and continued to ferment, and the pandemic prevention measures in European are likely to be tightened again, which is likely to lead to a decrease in the overseas consumption again. The contract is likely to keep fluctuating at high.

Nickel: The most-traded SHFE 2102 nickel contract ended the day 1.72% higher at 132,740 yuan/mt today. Open interest fell 12,681 lots to 135,403 lots.

Lead: The most-traded SHFE 2101 lead contract fell to a session low of 14,435 yuan/mt and ended the day 2.02% higher at 14,525 yuan/mt. Open interest rose 1,251 lots to 29,607 lots. There is a certain support at 14,400 yuan/mt, and there is little room for SHFE lead to continue to fall due to the shrinkage of secondary lead premium. However, it is in the off-season of consumption at the end of the year, and the oversupply gives upward pressure to lead prices. It is expected that the contract will mainly consolidate at low with support from 14,400 yuan/mt tonight.

Tin: The most-liquid SHFE 2102 tin contract climbed to a session high of 155,940 yuan/mt and finished the day 1.65% lower at 152,090 yuan/mt today. Open interest fell 3,823 lots to 29,555 lots. The contract is expected to keep fluctuating in the near term. Pressure above is expected to around 156,000 yuan/mt. Support below is expected to around 151,500 yuan/mt.

Evening comments Copper Aluminium Zinc Nickel Lead Tin

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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