SMM Evening Comments (Dec 7): Shanghai Nonferrous Metals Closed Mostly with Losses with Digestion of Bulls

SHANGHAI, Dec 7 (SMM) – Shanghai nonferrous metals closed mostly with losses after the investors priced in the recent bulls, and started to worry about the US rate hike pace and demand outlook in China.

Shanghai copper fell 0.7%, aluminium lost 0.36%, lead slid 1.13%, zinc added 0.37%, tin lost 0.88%, and nickel climbed 0.35%.

Copper: The most-traded SHFE 2301 copper closed down 0.7% or 460 yuan/mt at 65,440 yuan/mt, with open interest up 3,321 lots to 146,578 lots.

On the macro front, the comeback of Fed rate hike expectations and signs of economic recession put copper prices under pressure, and the market players have been increasingly worried about the demand outlook in China after the pandemic control measures loosened in China.

In the spot market, the spot premiums were halved in the day trading as large sellers sold off in exchange of cash before the delivery of SHFE 2212.

Aluminium: The most-traded SHFE 2301 aluminium closed down 0.36% or 70 yuan/mt at 19,140 yuan/mt, with open interest down 1,850 lots to 211,147 lots.

Aluminium inventory remained low, with little possibility of large accumulation in the near future. Smelters in Gansu and Inner Mongolia continued to resume production. Transactions in aluminium ingot and aluminium billet markets were relatively weak at the current high aluminium prices. Poor orders and high aluminium prices may drive some downstream producers to suspend their production. It is expected that aluminium prices will still fluctuate strongly, driven by expectations for loosening pandemic controls and low inventory. 

Lead: The most-traded SHFE 2301 lead closed down 1.13% or 180 yuan/mt at 15,770 yuan/mt, with open interest down 11,399 lots to 73,988 lots.

The cargo holders still mainly delivered their cargoes to the delivery warehouses, and the quotes in the spot market were firm though were rarely heard. The downstream players were not active. The secondary lead smelters were recently restricted by a number of factors including environmental protection inspection, raw material shortage, and cold weather, while the production situation differed by region. SHFE lead is expected to move rangebound with the macro front staying stable at present.

Zinc: The most-traded SHFE 2301 zinc closed up 0.37% or 90 yuan/mt at 24,610 yuan/mt, with open interest up 1,729 lots to 118,395 lots.

Intraday US dollar index rose, pressuring SHFE zinc. Meanwhile, the supply side is expected to remain abundant, but the low inventory will keep underpinning SHFE zinc. On the whole, the contract lacks strong upside momentum.

Tin: The most-traded SHFE 2301 tin closed down 0.88% or 1,710 yuan/mt at 193,580 yuan/mt, with open interest up 4,231 lots to 56,510 lots.

In the spot market, the smelters were cautious in early trade as the prices rose, and then hiked their quotes after SHFE tin rose. The premiums/discounts offered by the traders were stable, and the mainstream transactions were made with discounts. The spot market improved slightly after the market prices fell slightly. The downstream players still purchased on rigid demand, but some were scared off by the high prices.

Nickel: The most-traded SHFE 2301 nickel closed up 0.35% or 730 yuan/mt at 207,650 yuan/mt, with open interest up 5,440 lots to 83,734 lots.

In the spot market, Jinchuan nickel was in premiums of 7,500-8,000 yuan/mt, with an average of 7,750 yuan/mt, up 350 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 5,800-6,000 yuan/mt, with an average of 5,900 yuan/mt, flat on a daily basis. Imported pure nickel still suffered substantial losses, and the transactions were muted amid supply shortage of overseas pure nickel. For nickel briquette, the prices stood at 212,400-213,000 yuan/mt, up 2,550 yuan/mt from the previous trading day.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]