SMM Evening Comments (Dec 31): Shanghai Nonferrous Metals Mostly Closed with Gains amid Encouraging China PMI for December

SHANGHAI, Dec 31 (SMM) – Shanghai nonferrous metals mostly closed in the positive territory as the market was cheered up by the macro front, as China released its December official manufacturing and non-manufacturing PMI readings, which topped market expectation.

Shanghai copper added 0.51%, aluminium gained 0.54%, lead lost 0.29%, zinc jumped 0.33%, tin advanced 1.28%, and nickel rose 1.36%.

Copper: The most-traded SHFE 2202 copper closed up 0.51% or 360 yuan/mt at 70380 yuan/mt, with open interest down 5286 lots to 133670 lots.

On the macro front, the US initial jobless claims dropped unexpectedly, which showed that the labour market was still robust despite the new round of COVID, boosting market sentiment. Oil prices moved up on the news that the OPEC will gradually and slightly push up the output, which is a bullish factor for copper.

In China, the December official manufacturing and non-manufacturing PMI readings topped estimate and were in the expansion range, indicating quicker recovering in industry and services businesses, which cheered the market up.

On the fundamentals, the copper inventory in the bonded zone rose 15,600 mt to 187,300 mt, rising for the first time after declining for eleven straight weeks, mainly as the arrivals at ports flowed into the bonded zone. However, the total inventory was still low, which underpinned copper prices.

The market shall closely watch how the COVID influences the overseas market and the US non-farm payrolls due next week when the futures market reopens next week.

Aluminium: The most-traded SHFE 2202 aluminium closed up 0.54% or 110 yuan/mt to 20380 yuan/mt, with open interest down 13198 lots to 207785 lots.

The capitals will stand on the sidelines around the New Year’s Day, and the overnight SHFE aluminium is likely to move rangebound. The market shall watch how the electricity issue in the Europe will further impact the market.

Lead: The most-traded SHFE 2202 lead closed down 0.29% or 45 yuan/mt at 15300 yuan/mt, with open interest down 1591 lots to 36978 lots.

The spot market was quiet on the last trading day of 2021, and the traders rarely made offers. Some downstream companies also suspended their purchasing, resulting in muted market transactions.

Zinc: The most-traded SHFE 2202 zinc closed up 0.33% or 80 yuan/mt at 24125 yuan/mt, with open interest down 8028 lots to 89750 lots.

The demand and supply of zinc was generally stable. Though the supply side was constrained, the demand side weakened as well. Some galvanising and zinc oxide plants in north China was restricted by the upcoming Winter Olympics. The traders, on the other hand, was busy liquidating their inventories, and the speculation demand was low.

Tin: The most-traded SHFE 2202 tin closed up 1.28% or 3740 yuan/mt at 296110 yuan/mt, with open interest down 268 lots to 48203 lots.

On the fundamentals, domestic inventory kept falling, the traders mostly quoted with discounts but the transaction was still unsatisfactory. The transaction prices of spot was around 290,000 yuan/mt.

Nickel: The most-traded SHFE 2202 nickel closed up 1.36% or 2040 yuan/mt to 152080 yuan/mt, with open interest up 2752 lots to 154950 lots.

Intraday LME nickel bottomed out and moved up, and SHFE nickel basically shadowed the moves. SS2202 rallied recently, which also support nickel prices. The support from the fundamentals was still weak. The demand from the stainless steel and new energy sectors picked up but minimally. The currently low pure nickel inventory also offered some support to nickel prices.