SMM Evening Comments (Dec 23): Shanghai nonferrous metals declined for the most part, lead advanced 0.76%

SHANGHAI, Dec 23 (SMM) – SHFE nonferrous metals broadly fell on Wednesday December 23 following new remarks from US President Donald Trump surrounding the new Covid-19 relief package.

Shanghai nonferrous metals, except for lead, traded lower on Wednesday December 23. Nickel dropped 3.64% to lead the losses, zinc shed 2.22%, tin declined 0.82%, copper went down 1.11% and aluminium fell 1.24%, while lead advanced 0.76%.

The ferrous complex fell across the board. Hot-rolled coil went down 3.74%, iron ore shed 5.78%, and rebar fell 4.08%.

Copper: The most-traded SHFE 2102 copper contract finished the day 0.52% lower at 57,850 yuan/mt. Open interest rose 441 lots to 115,000 lots.

The variant COVID-19 strain appeared in Britain may have spread in America, Germany, France and Switzerland. Pessimism in the market continues to spread. US announced that the annualized quarter-on-quarter final value of real GDP in the third quarter stood at 33.4%, a record high, with an expected value of 33.1% and a revised value of 33.1%. Pending home sales for November in the US came in at 6.69 million, with an expected 6.7 million, and the previous value was 6.86 million, which basically stabilised. Britain's GDP in the third quarter also increased than expectations. Several European parliamentarians and China analysts urged the European side to postpone negotiations with China, and to negotiate with the Biden administration on a common China strategy first, so as to suppress copper prices to some extent.

US initial jobless claims and seasonally-adjusted new home sales will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2101 aluminium contract finished the day 1.24% lower at 15,890 yuan/mt. Open interest fell 7,267 lots to 79,607 lots. China imported 47,000 mt of aluminium scrap in October, down 40.4% on the month, and down 21.5% on the year, and imports totalled 680,000 mt in the first ten months of 2020, down 48% from the same period last year, the latest customs data showed.

Zinc: The most-active SHFE 2102 zinc contract fell to a session low of 21,195 yuan/mt and closed down 2.22% at 21,335 yuan/mt. Open interest rose 715 lots to 94,700 lots. Affected by overseas pandemic fermentation, market panic led to collective correction of nonferrous metals. On fundamentals, downstream demand for stockpiling and restocking is better after the price drops sharply, and social stocks in Shanghai and Guangdong are at a low level in the same period, which provides low support for zinc prices. The contract is expected to have the momentum to stop falling.

Nickel: The most-traded SHFE 2103 nickel contract ended the day 3.64% lower at 124,010 yuan/mt today. Open interest rose 8,312 lots to 127,083 lots. O

Lead: The most-traded SHFE 2102 lead contract slid to an intraday low of 14,125 yuan/mt and ended the day 0.76% higher at 14,520 yuan/mt. Open interest fell 910 lots to 31,225 lots. Downstream smelters are reluctant to sell, and downstream willingness for restocking at low prices is high. Prices of battery scrap are unlikely to drop, which also supports lead prices. Whether long positions entering the market will boost SHFE Lead to move above 14,500 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2102 tin contract climbed to a session high of 152,460 yuan/mt and finished the day 0.24% lower at 150,380 yuan/mt today. Open interest fell 3,448 lots to 23,262 lots. The contract is expected to fluctuate weakly in the near term. Pressure above will be seen from 153,000 yuan/mt. Support below will be seen from 148,000 yuan/mt.