SMM Evening Comments (Dec 29): Shanghai nonferrous metals declined for the most part, tin advanced 0.06%

SHANGHAI, Dec 29 (SMM) – SHFE nonferrous metals broadly fell on Tuesday December 29 following overnight gains on Wall Street that sent the major averages to record highs.

Shanghai nonferrous metals, except for tin, traded lower on Tuesday December 29. Zinc dropped 3.09% to lead the losses, nickel shed 0.74%, lead declined 0.94%, copper went down 0.95% and aluminium fell 2.48%, while tin advanced 0.06%.

A total of 83 vessels carrying 13.44 million mt of iron ore arrived at major Chinese ports during December 20-26, SMM estimates. This was down 3.36 million mt from the previous week, but up 1.75 million mt from the same period last year. Arrivals at the two ports in Tangshan fell by 11% on the week, while that at the two major ports in Shandong dropped nearly 14%.

The ferrous complex fell across the board. Hot-rolled coil went down 2.33%, iron ore shed 2.46%, and rebar fell 1.53%.

Copper: The most-traded SHFE 2102 copper contract finished the day 0.95% lower at 58,180 yuan/mt. Open interest fell 4,545 lots to 121,597 lots. After Trump signed the $2.3 trillion pandemic relief bill and government expenditure plan, no major events occurred in the market. The envoys of EU member States urged the European Commission to complete the negotiation of China-EU investment agreement with the Chinese government within a few days, so as to further open the Chinese market to EU investors. The European Commission may announce the draft agreement soon. In addition, the EU ambassadors unanimously approved the EU-UK trade agreement, paving the way for the agreement to take effect on January 1st. The EU government may formally approve the trade agreement on December 29th, and the British House of Commons will vote on December 30th. The COVID-19 epidemic continues to develop in Europe, America and other countries, and the cumulative death toll in COVID-19 in Spain exceeds 50,000. The number of hospitalizations in the US has reached a new high, and officials have warned that the number of infections may increase greatly after Christmas holidays. Market participants mainly wait and see near year-end. Money supply in the US, the trend of LME copper and whether the contract could remain over the moving average and stopped falling will come under scrutiny tonight.  

Aluminium: The most-liquid SHFE 2102 aluminium contract finished the day 2.48% lower at 15,365 yuan/mt. Open interest fell 893 lots to 116,697 lots.

Zinc: The most-active SHFE 2102 zinc contract closed down 3.09% at 21,025 yuan/mt. Open interest fell 7,720 lots to 87,380 lots. However, the shortage of ore supply has not changed. It is expected that TCs will maintain a downward trend and will still provide long-term upward momentum for zinc prices. It is expected that the room for zinc prices to continue to fall is limited. The support from 21,000 yuan/mt and 40-day moving average will be monitored tonight.

Nickel: The most-traded SHFE 2103 nickel contract ended the day 0.74% lower at 126,790 yuan/mt today. Open interest rose 4,852 lots to 152,025 lots.

Lead: The most-traded SHFE 2102 lead contract slid to a session low of 14,595 yuan/mt before repairing some losses to end the day 0.94% lower at 14,715 yuan/mt. Open interest fell 1,333 lots to 30,645 lots. The spot market is approaching the off-season at the end of the year, and the turnover is bleak. The upward momentum of SHFE lead is insufficient. Whether short positions will enter the market to test support from 60-day moving average of 14,700 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2102 tin contract rose to an intraday high of 154,240 yuan/mt and finished the day 0.06% higher at 153,380 yuan/mt today. Open interest rose 7,701 lots to 29,180 lots. The contract is expected to keep fluctuating in the near term. Pressure above is expected to around 155,000 yuan/mt. Support below is expected to around 150,000 yuan/mt.