SMM Evening Comments (Jan 7): Nonferrous metals on the SHFE mostly advanced, nickel jumped 2.9%

SHANGHAI, Jan 7 (SMM) – SHFE nonferrous metals rose for the most part on Thursday January 7. Nickel, the best performer, jumped 2.9% to lead the gains, zinc advanced 1.77%, lead rose 1.33%, copper gained 1.04% and tin added 0.25%, while aluminium shed 0.49%. 

SMM data showed that stocks of 6063 aluminium billet across the five major consumption areas – Foshan, Wuxi, Huzhou, Changzhou and Nanchang – in China expanded 14,900 from the prior week to 85,700 mt as of January 7. Stocks were stable in Wuxi, but built up in the other four areas, with Guangdong seeing the largest increase in aluminium billet stocks which increased 9,100 mt on the week to 41,600 mt. Stocks expanded 3,200 mt to 10,000 mt in Nanchang, while rose slightly by 1,600 mt and 1,000 mt in Changzhou and Huzhou respectively.

Social inventories of primary aluminium across eight consumption areas in China, including SHFE warrants, roes 51,000 mt from the prior week to 664,000 mt as of January 7. Rising arrivals of imported primary aluminium ingots and those from Xinjiang and Qinghai contributed to the rise in inventories.

Copper: The most-traded SHFE 2102 copper contract rose 1.04% to finish the day at 59,380 yuan/mt, with open interest decreasing 2,024 lots to 95,867 lots.     

Congress early Thursday morning confirmed the election of Joe Biden as president, a day after a mob invaded the Capitol in a chaotic effort to avoid having President Donald Trump be formally recognized as the loser in the race. The 10-year U.S. Treasury yield continued its ascent above the 1% mark on Thursday morning, following a projected win for the Democrats of two Senate seats in the Georgia runoff elections. Private sector employment fell in December as consumer and business activity in some states was affected by lockdowns to combat the coronavirus pandemic which has worsened across much of the country. Employers in the private sector shed 123,000 jobs in December – the first decline since April, according to the ADP National Employment Report reported Wednesday. The US dollar index, which tracks the greenback against leading currencies, hovered around 89.5, providing support to copper prices.  

US first-time filings for unemployment benefits in the week ended January 2 set for release tonight will be monitored.

Zinc: The most-liquid SHFE 2102 zinc contract ended the day 1.77% higher at 21,620 yuan/mt after hitting a one week high at 21,700 yuan/mt earlier in the session, with open interest decreasing 765 lots to 72,925 lots. Output cuts at zinc smelters missed expectations, and consumption continued to weak. Zinc smelters in north China will start the Chinese New Year holiday from mid-January.

Lead: The most-liquid SHFE 2102 lead contract rose 1.33% to close the day at a nearly one-month high of 15,230 yuan/mt, with trading volume rising 7,159 lots to 62,558 lots. Several lead-acid battery producers suspended production due to a resurgence of COVID-19 cases in Hebei province, which pressured SHFE lead, but expectations of pre-holiday stockpiling provided support to lead prices. Pressure from the 15,200 yuan/mt mark will be monitored tonight. 

Tin: The most-traded SHFE 2103 tin contract added 0.25% to end the day at 158,650 yuan/mt, with open interest rising 1,490 lots to 41,961 lots. It is expected to move between 155,000-160,000 yuan/mt tonight.