SMM Evening Comments (Dec 14): Shanghai Nonferrous Metals Closed Mixed ahead of US Rate Resolution

SHANGHAI, Dec 14 (SMM) – Shanghai nonferrous metals closed mixed today. On the macro front, the US November CPI reading was lower than market expectations, reinforcing the expectation that the Federal Reserve will slow the pace of interest rate hikes at the two-day rate meeting, and the investors are keen on the final results.

Shanghai copper fell 0.91%, aluminium gained 0.53%, lead slid 0.54%, zinc lost 0.28%, tin added 0.43%, and nickel lost 1.32%.

Copper: The most-traded SHFE 2301 copper closed up 0.91% or 600 yuan/mt at 66,510 yuan/mt, with open interest up 2,005 lots to 142,834 lots.

On the macro front, the U.S. Department of Labor released the U.S. CPI data for November. The unadjusted U.S. November CPI annual rate stood at 7.1%, against a previous value of 7.70% and a forecast value of 7.30%, marking the smallest increase since December 2021. The CPI reading was lower than market expectations, reinforcing the expectation that the Federal Reserve will slow the pace of interest rate hikes at the two-day rate meeting. As such, the US dollar weakened, boosting copper prices.

In the spot market, the participants in the spot market mostly stood wait-and-see before the delivery of SHFE 2212, and the transactions were relatively thin in the morning. The open interest of SFHE 2212 was 9,715 lots, and SHFE warrants inventory added 325 mt to 24,100 mt. In addition, the market players were less involved in market transactions in consideration of capital risks and the end of annual long-term orders.

Aluminium: The most-traded SHFE 2301 aluminium closed up 0.53% or 100 yuan/mt at 18,800 yuan/mt, with open interest down 10,872 lots to 148,609 lots.

On the macro side: the US Department of Labor announced that the November inflation data was significantly lower than the previous reading. The market expected the Fed to take a less hawkish stance, causing the US dollar index to fall sharply while lifting commodities. On the supply side, smelters in Guizhou may face production cuts of nearly 30%. On the demand side, despite looser pandemic controls, the downstream consumption was poor in the traditional off-season. Some aluminium processing plants plan to close early for the Chinese New Year. Low social inventory will support aluminium prices. SHFE aluminium is expected to fluctuate widely in the term. SMM will closely watch changes in downstream operating rates and social inventory.

Lead: The most-traded SHFE 2301 lead closed down 0.54% or 85 yuan/mt at 15,530 yuan/mt, with open interest up 1,778 lots to 65,653 lots.

In the spot market, the cargo holders were less active in making shipments, and the sources available in the market were scarce. The downstream players still purchased on rigid demand, and the spot market animation did not improve palpably.

Zinc: The most-traded SHFE 2301 zinc closed down 0.28% or 70 yuan/mt at 24,815 yuan/mt, with open interest down 5,944 lots to 104,191 lots.

SHFE zinc moved in the range of 24,670-25,030 yuan/mt today amid the mixture of bulls and bears. The capitals have been cautious until there is clear guidance for the next move.

Tin: The most-traded SHFE 2301 tin closed up 0.43% or 830 yuan/mt at 195,020 yuan/mt, with open interest up 1,109 lots to 48,092 lots.

In the spot market, SHFE tin rose again, and the downstream players mainly stood wait-and-see, while the spot transactions were poor. SHFE warrants added 132 mt to 5,500 mt.

Nickel: The most-traded SHFE 2301 nickel closed down 1.32% or 2,930 yuan/mt at 219,700 yuan/mt, with open interest down 6,693 lots to 77,812 lots.

On the supply side, the imported pure nickel still suffered losses, and the premiums of Jinchuan and NORNICKEL nickel trended towards different directions. For NPI, the market was relatively active today, and the prices rose slightly with falling social inventory, but are likely to stabilise with falling demand. On the demand side, the spot transactions of stainless steel were muted, and the social inventory accumulated. The short-term spot stainless steel prices are likely to remain stable. In the alloy market, the consumption of pure nickel will fall as the sector ushered in the seasonal low. To sum up, nickel prices lacked strong support amid falling demand for pure nickel as well as rising pure nickel warrants and social inventory.

[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.]