SMM Evening Comments (Dec 23): Shanghai Nonferrous Metals All Closed with Gains amid An Encouraging Macro Market

Published: Dec 23, 2021 19:00 (GMT+8)

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Shanghai nonferrous metals all closed with gains as the macro front conveyed multiple bullish news today, and the energy shortage in the eurozone continued to serve as a bullish factor.

SHANGHAI, Dec 23 (SMM) – Shanghai nonferrous metals all closed with gains as the macro front conveyed multiple bullish news today, and the energy shortage in the eurozone continued to serve as a bullish factor.

Shanghai copper rose 0.98%, aluminium gained 2.24%, lead climbed 1.85%, zinc added 2.81%, tin advanced 0.64%, and nickel jumped 2.67%.

Copper: The most-traded SHFE 2202 copper closed up 0.98% or 680 yuan/mt at 70180 yuan/mt, with open interest up 6165 lots to 144770 lots.

The macro front conveyed considerable bullish news today. The US consumer confidence index for December rose; the annualised US GDP growth in the third quarter was revised to 2.3% according to US Department of Commerce, slightly better than estimate; the second-hand house sales for the third consecutive month in November; a study carried out by the Imperial Engineering, London showed that the hospitalisation risks of omicron COVID variant were 40-50% lower than that of Delta, all of which supported copper prices.

In the oil market, the weekly EIA crude stocks unexpectedly dropped 4.72 million barrels in the week of December 17, compared with the 2.3 million barrels estimate, which boosted oil prices.

However, the market still carried uncertainties from the interest rate hike estimate under the impacts of inflations in the eurozone, the severity of omicron variant, the accessibility of Pfizer’s oral medicine for COVID.

Tonight, the market shall keenly watch the US initial jobless claims last week, University of Michigan consumer confidence index for December, as well as the seasonally-adjusted GDP reading for Canada in October.

Aluminium: The most-traded SHFE 2202 aluminium closed up 2.24% or 445 yuan/mt to 20315 yuan/mt, with open interest up 9760 lots to 232640 lots.

The centre of LME aluminium price range rose above $2,830/mt as the news of rising energy and natural gas prices in the eurozone fermented. SHFE aluminium prices rose as well with an intraday gain of more than 2%, boosted by low SHFE aluminium inventory and surging LME aluminium. The market shall still watch the sustainability of consumption as well as the changes in costs.

Lead: The most-traded SHFE 2202 lead closed up 1.85% or 285 yuan/mt at 15705 yuan/mt, with open interest up 5380 lots to 47774 lots.

In spot market, the smelters were transacting with wider discounts. The primary lead smelters mostly offered with discounts of 100-0 yuan/mt over SMM#1 lead, and secondary lead was traded with discounts of 300-420 yuan/mt against SMM #1 lead. The quotes were mainly in discounts of 20-0 yuan/mt in the trading markets in Zhejiang and Jiangsu. The traders were close to finishing liquidating their inventory, while the smelters were still actively making shipments.

On the demand side, the downstream battery companies were sluggish in making purchases in light of rising lead prices. And the market transactions were low. The energy shortages boosted lead prices, but the quiet spot market weighed on lead prices.

Zinc: The most-traded SHFE 2202 zinc closed up 2.81% or 670 yuan/mt at 24480 yuan/mt, with open interest up 15221 lots to 108499 lots.

The market worries over the supply side amid rising natural gas and electricity prices have boosted the LME zinc prices, which subsequently pushed up SHFE zinc. The supply side was now the major driving force for zinc prices. On the demand side, the downstream companies were even more sluggish in demand during the seasonal low, coupled with rising zinc prices, which is a bearish factor for zinc. Nonetheless, the raging energy crisis will offer stronger support in the short term.

Tin: The most-traded SHFE 2202 tin closed up 0.64% or 1800 yuan/mt at 284030 yuan/mt, with open interest up 2498 lots to 28366 lots.

On the fundamentals, domestic warrants inventory dropped slightly, and the spot market prices were basically stable and unaffected by SHFE tin.

Nickel: The most-traded SHFE 2202 nickel closed up 2.67% or 3870 yuan/mt to 149020 yuan/mt, with open interest up 5861 lots to 156201 lots.

The energy shortage in the eurozone kept pushing up non-ferrous metals, and SHFE nickel moved up following the broad market. The fundamentals were relatively stable, and the marginal demand was still weak, which meant that there were no strong bullish factors.

copper aluminium lead zinc tin nickel

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