SMM Evening Comments (Jan 18): Shanghai nonferrous metals closed mostly higher, zinc fell 0.61%

SHANGHAI, Jan 18 (SMM) – SHFE nonferrous metals rose for the most part on Monday January 18 as investors in the region reacted to Chinese economic data, including the country's GDP print for the fourth quarter.

China reported its GDP rose 2.3% last year as the world fought to contain the coronavirus pandemic. That compared against economists' expectations for GDP expansion by just over 2%. Still, retail sales in the country declined, contracting 3.9% for the year.

Tin, the best performer, rose 1.76%, aluminium advanced 0.54%, lead went up 0.27%, copper climbed 0.08% and nickel gained 0.5%, while zinc dropped 0.61%.

The ferrous complex rose across the board. Iron ore increased 1.65%, rebar rose 0.55%, and hot-rolled coil climbed 0.16%.

Copper: The most-traded SHFE 2103 copper contract finished the day 0.08% higher at 59,280 yuan/mt. Open interest rose 3,305 lots to 125,225 lots.

Biden urged immediate action on the $1.9 trillion economic stimulus plan, but some rescue projects in the proposal were opposed by many Republicans. The market has high expectations for the upcoming new round of stimulus bill, and economists expect that the new round of large-scale fiscal stimulus will boost the economic growth of the US this year. Biden will be sworn in as the 46th President of the US on January 20. The FBI said that six States are facing the great threat of armed demonstrations, and the capital market is still wary of a series of black swan events that may happen that day. In terms of data, the US retail sales unexpectedly fell in December, the producer price index rose lower than expected, and the manufacturing output increased for the eighth consecutive month. Consumer confidence fell more than expected in January. China's GDP topped 100 trillion yuan, increasing by 2.3% year on year in 2020 and 6.5% year on year in the fourth quarter. The bullish sentiment of the market was affected by this news, which stimulated the domestic capital market to increase in the afternoon.

The development of the US stimulus bill, LME copper, and whether the contract could seek support from five- and ten-day moving average to remain above 59,000 yuan/mt will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2103 aluminium contract finished the day 0.54% higher at 14,940 yuan/mt. Open interest rose 6,350 lots to 144,865 lots. Operating rates at major aluminium processors decreased 0.2 percentage point last week. Aside from impact from non-market factors, such as gas restrictions, slower logistics, and environmental protection, orders began to decline. The decline in orders was more obvious from the construction sector, while orders from the automotive sector were relatively strong.

Zinc: The most-active SHFE 2103 zinc contract closed down 0.61% at 20,415 yuan/mt. Open interest rose 9,503 lots to 89,243 lots. China's GDP data in 2020 is better than expected, and the nonferrous metals stopped falling and picked up due to the recovery of macro sentiment. However, zinc price lacks the upward momentum due to the pessimistic expectation of zinc consumption. Zinc prices are expected to fluctuate weakly tonight.

Nickel: The most-traded SHFE 2103 nickel contract ended the day 0.5% higher at 134,930 yuan/mt today. Open interest fell 2,969 lots to 198,598 lots.

Lead: The most-traded SHFE 2103 lead contract slid to a session low of 14,845 yuan/mt and ended the day 0.27% higher at 14,985 yuan/mt. Open interest rose 2,672 lots to 34,453 lots. Smelters in the spot market have a high intention to ship today, while the downstream restocking activity is tepid. Whether the contract could remain above 15,000 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2103 tin contract rose to an intraday high of 157,060 yuan/mt and finished the day 1.76% higher at 156,760 yuan/mt today. Open interest fell 328 lots to 31,760 lots.