SMM Evening Comments (Feb 1): Shanghai nonferrous metals ended mixed as China's manufacturing growth slowed in January

SHANGHAI, Feb 1 (SMM) – SHFE nonferrous metals closed mixed on Monday January 29 as data releases showed manufacturing activity in China growing at a slower pace in January.

A private survey showed Chinese manufacturing activity growth slowing in January, with the Caixin/Markit manufacturing Purchasing Managers' Index (PMI) coming in at 51.5. That compared against expectations for a reading of 52.7 by analysts in a poll.

Figures above 50 in PMI readings represent expansion, while those below that level signify contraction.

Aluminium, the best performer, rose 2.21%, zinc advanced 0.36% and nickel went up 0.74%, while copper edged down 0.07%, tin fell 2.02% and lead weakened 1.47%.

The ferrous complex fell across the board. Hot-rolled coil went down 1.52%, iron ore shed 0.81%, and rebar fell 1.15%.

Copper: The most-traded SHFE 2103 copper contract finished the day 0.07% lower at 57,910 yuan/mt. Open interest fell 4,511 lots to 117,638 lots.

New cases in the US continued to decline. The Biden administration's hope of reaching a $1.9 trillion bailout agreement between the two parties was frustrated, and the Democratic Party will start the stimulus legislation alone. In terms of data, the number of second-hand housing contracts in the US declined in December. Household consumption expenditure in the US declined for the second consecutive month in December. It is estimated that the People's Bank of China (PBOC) will make a net investment of 1.7 trillion yuan before CNY, and the liquidity environment will return to a reasonable and sufficient level, thus rapidly improving market expectations. The market sentiment is stable, CNY is approaching, and the market participants are mainly short-term operators.

Markit manufacturing PMI in Germany, the US and Europe, the trend of LME copper and whether the contract could remain above 58,000 yuan/mt will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2103 aluminium contract finished the day 2.21% higher at 15,260 yuan/mt. Open interest rose 9,414 lots to 174,047 lots.

Zinc: The most-active SHFE 2103 zinc contract closed up 0.36% at 19,625 yuan/mt. Open interest fell 7,913 lots to 95,022 lots. New cases of the COVID-19 in foreign countries dropped, and the macro pessimism eased. On the fundamentals, TCs of Sichuan and Yunnan mines dropped, and the tight supply situation did not changed. In addition, zinc ingot stocks declined last week to provide support for zinc prices. It is expected that zinc prices will fluctuate and adjust under the support.

Nickel: The most-traded SHFE 2104 nickel contract ended the day 0.74% higher at 132,740 yuan/mt today. Open interest rose 11,040 lots to 140,305 lots.

Lead: The most-traded SHFE 2104 lead contract slid to a session low of 15,085 yuan/mt and ended the day 1.47% lower at 15,075 yuan/mt. Open interest fell 1,831 lots to 37,271 lots. It is expected that lead prices will keep fluctuating weakly before CNY. Whether the 20-day moving average can provide effective support will be monitored tonight.

Tin: The most-liquid SHFE 2103 tin contract rose to an intraday high of 173,450 yuan/mt and finished the day 1.55% lower at 169,450 yuan/mt today. Open interest fell 8,173 lots to 17,673 lots. With the unsealing of Wa Special Region 2 of Myanmar and the recovery of tin ore transportation with the market's worries about liquidity, the contract fell under pressure, but the overall supply of raw materials was still relatively tight, which will support the trend. It is expected that the contract will mainly fluctuate at a high level in the near term. Pressure above will be seen from 167,000 yuan/mt today. Support below will be seen from 175,000 yuan/mt today.