SMM Evening Comments (Dec 13): Shanghai Nonferrous Metals Closed Mostly with Losses as Investors Stay Cautious ahead of US Rate Meeting

SHANGHAI, Dec 13 (SMM) – Shanghai nonferrous metals closed mostly with losses as the investors were cautious before the US Fed’s rate meeting.

Shanghai copper fell 0.32%, aluminium dropped 1.08%, lead slid 0.06%, zinc lost 0.12%, tin added 1.03%, and nickel rose 1.93%.

Copper: The most-traded SHFE 2301 copper closed down 0.32% or 210 yuan/mt at 66,070 yuan/mt, with open interest down 2,139 lots to 140,829 lots.

On the macro front: (1) The monthly rate of UK 3M GDP was -0.3% in October, with a previous value of -0.2% and a forecast of -0.40%. (Bullsih) (2) The annual rate of US November PPI was 7.4%, with a previous value of 8.1% and a forecast of7.20% (Bearish)

In the spot market, the spot premiums hovered around 0 yuan/mt in the last trading day before the delivery of SHFE 2212. The market participants with no significant financial pressure at year-end were not very active when the spot prices were quoted with discounts.

Aluminium: The most-traded SHFE 2301 aluminium closed down 1.08% or 205 yuan/mt at 18,740 yuan/mt, with open interest down 13,651 lots to 159,481 lots.

On the supply side, Guizhou’s electricity is in short supply, and local aluminium smelters may reduce their capacity by 20%. On the demand side, the downstream consumption was poor in the traditional off-season. Some aluminium processing plants plan to close early for the Chinese New Year. The market is waiting for the US Fed’s policy meeting this week to see whether the Fed will slow down the pace of interest rate hikes. Low social inventory will support aluminium prices. SHFE aluminium is expected to fluctuate widely in the short term.

Lead: The most-traded SHFE 2301 lead closed down 0.06% or 10 yuan/mt at 15,590 yuan/mt, with open interest down 3,648 lots to 63,875 lots.

In the spot market, there were few cargoes available in the market, and the quotes were relatively firm. Downstream players still purchases on rigid demand, but favoured secondary lead amid the current spread between primary and secondary lead. The transactions were refined lead were muted.

Zinc: The most-traded SHFE 2301 zinc closed down 0.12% or 30 yuan/mt at 24,730 yuan/mt, with open interest down 4,048 lots to 110,135 lots.

SHFE zinc surged after opening high, but then fell with the longs paying off. SHFE zinc was still supported by the low social inventory, and the market awaits guidance.

Tin: The most-traded SHFE 2301 tin closed up 1.03% or 1,980 yuan/mt at 194,870 yuan/mt, with open interest down 8,998 lots to 46,983 lots.

In the spot market, the futures prices rose again, while the downstream players were quite anxiety. SHFE warrants inventory added 46 mt to 5,368 mt.

Nickel: The most-traded SHFE 2301 nickel closed up 1.93% or 4,250 yuan/mt at 224,180 yuan/mt, with open interest up 3,047 lots to 84,505 lots.

In the spot market, Jinchuan nickel was in premiums of 7,000-7,500 yuan/mt, with an average of 7,250 yuan/mt, down 400 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 5,800-6,000 yuan/mt, with an average of 5,900 yuan/mt, up 150 yuan/mt on a daily basis. The sources of imported pure nickel were still scarce as the import window remained closed, while the premiums of Jinchuan and NORNICKEL nickel moved towards different directions, but did not fall significantly amid high SHFE nickel. The spot market was relatively quiet. For nickel briquette, the prices stood between 224,800-225,700 yuan/mt, up 5,150 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.]