SMM Evening Comments (Jan 4): Shanghai nonferrous metals rose broadly on expanded Chinese manufacturing activity in December

SHANGHAI, Jan 4 (SMM) — SHFE nonferrous metals were mostly higher on Monday January 4 as Chinese manufacturing activity expanded in December.

A private survey released Monday showed Chinese manufacturing activity expanding in December, with the Caixin/Markit manufacturing Purchasing Managers’ Index (PMI) for the month coming in at 53.0. That compared against November’s reading of 54.9. The 50-level in PMI readings separates expansion from contraction.

China’s official manufacturing PMI released Thursday showed the country’s factory activity expanding in December, albeit at a slower pace compared to November’s reading.

On the SHFE, nickel, the best performer, surged 3.12% to lead the gains, lead jumped 2.03%, tin rose 1.77%, zinc added 0.34% and copper advanced 0.33%, while aluminium shed 0.29%.

SMM data showed that social inventories of refined zinc ingots across Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Shandong and Hebei expanded by 6,100 mt from last Thursday December 31 to 147,600 mt as of Monday January 4. The stocks were up 1,400 mt from last Monday December 28.

Copper: The most-traded SHFE 2102 copper contract trended higher today, rising 0.33% to close at 58,160 yuan/mt. Open interest decreased 8,877 lots to 96,881 lots, while trading volume lost 54,000 lots to 82,000 lots.

Senate Majority Leader Mitch McConnell once again put off a vote on increasing COVID-19 relief checks from $600 to $2,000. US first-time filings for jobless benefits fell unexpectedly to a one-month low in the week ended December 26, but the number of unemployment is expected to remain high in January as enterprises have been ordered to shut down amid rising coronavirus cases. Data compiled by Johns Hopkins University showed more than 20 million Covid-19 infections have been confirmed in the U.S., along with over 1.8 million virus-related deaths around the world. British Prime Minister Boris Johnson warned that stricter restrictions would be taken, including closing schools. World Health Organisation (WHO) approved Pfizer's vaccine for emergency use, while India approved the AstraZeneca vaccine. The US dollar index, which tracks the greenback against leading currencies, hovered around 89.7, providing support to copper prices. US Markit manufacturing purchasing managers’ index (PMI) for December set to release tonight will be monitored.

Zinc: The most-liquid SHFE 2102 zinc contract finished the day 0.34% higher at 20,905 yuan/mt, with open interest losing 4,448 lots to 78,301 lots. Whether the contract could break through the 21,000 mark tonight will be monitored.

Nickel: The most-traded SHFE 2103 nickel contract surged 3.12% to end the day at 128,210 yuan/mt, with open interest increasing 13,527 lots to 167,792 lots.

Lead: The most-active SHFE 2102 lead contract climbed to a three-week high of 15,140 yuan/mt in the morning before paring some gains to close the day 2.03% higher at 15,045 yuan/mt, with open interest decreasing 1,565 lots to 29,719 lots. Whether the contract could steady above 15,000 yuan/mt tonight will be monitored. 

Tin: The most-traded SHFE 2103 tin contract finished the day 1.77% higher at 154,350 yuan/mt, after hitting a two-week high at 154,500 yuan/mt earlier in the session, with open interest rising 2,717 lots to 34,093 lots. Pressure above will be seen from 156,000 yuan/mt tonight.