SMM Evening Comments (Dec 21): Shanghai Nonferrous Metals Closed Mostly with Gains after Investors Digesting Bears

SHANGHAI, Dec 21 (SMM) – Shanghai nonferrous metals closed mostly with gains as the bears have almost been digested. On the macro front, the Bank of Japan announced that the upper limit of the target range of treasury yield was raised, and the yen rose significantly while the US dollar index weakened overnight, which is also bullish for metals prices.

Shanghai copper rose 0.92%, aluminium added 0.51%, lead gained 0.06%, zinc lost 0.06%, tin jumped 1.55%, and nickel climbed 1.78%.

Copper: The most-traded SHFE 2301 copper closed up 0.92% or 600 yuan/mt at 65,760 yuan/mt, with open interest down 10,182 lots to 104,044 lots.

On the macro front, the Bank of Japan announced that the upper limit of the target range of treasury yield was raised, and the yen rose significantly while the US dollar index weakened overnight. When the bears have basically been digested by the investors, SHFE copper rebounded.

In the spot market, downstream demand was damaged by rising SHFE copper today. But the premiums edged up amid tight supply of goods circulating in the market.

Aluminium: The most-traded SHFE 2301 aluminium closed up 0.51% or 95 yuan/mt at 18,655 yuan/mt, with open interest down 9,582 lots to 119,748 lots.

On the fundamentals, the supply of aluminium is likely to fall short in December due to power rationing in south-west China, but the global supply has still maintained growth. On the demand side, the downstream sectors entered the off-season featuring sluggish consumption. Low inventory that continued to fall during off-season offered some support to aluminium prices, and tight supply in the spot market and the traders unwilling to sell sustained the spot premiums at a high level. On the whole, SHFE aluminium price is with downstream potential though is unlikely to fall significantly without clear bullish factors in the market.

Lead: The most-traded SHFE 2301 lead closed up 0.06% or 10 yuan/mt at 15,505 yuan/mt, with open interest down 9,818 lots to 35,999 lots.

The cargo holders were active in making shipments today, while the quotes were firm amid insufficient sources available in the market. The supply varied by region subject to the local pandemic situation. The downstream players mostly purchased on demand, and the spot market turned even quieter.

Zinc: The most-traded SHFE 2301 zinc closed down 0.06% or 15 yuan/mt at 23,480 yuan/mt, with open interest down 11,170 lots to 54,578 lots.

The absolute prices of zinc ingot fell, which stimulated the buying interest of downstream players. As such, the social inventory is likely to fall constantly in the near term, offering some support to zinc price.

Tin: The most-traded SHFE 2301 tin closed up 1.55% or 2,980 yuan/mt at 194,650 yuan/mt, with open interest down 6,729 lots to 35,345 lots.

In the spot market, several smelters held the prices particularly firm in early trade, and the quotes offered by the smelters diverged. The premiums/discounts offered by the traders were also quite divergent, and the number of quotes dropped from the previous day. The market transactions were muted as a whole.

Nickel: The most-traded SHFE 2302 nickel closed up 1.78% or 3,770 yuan/mt at 215,090 yuan/mt, with open interest up 2,658 lots to 59,055 lots.

In the spot market, Jinchuan nickel was in premiums of 10,500-11,000 yuan/mt, with an average of 10,750 yuan/mt, up 500 yuan/mt from the previous trading day. NORNICKEL nickel was in premiums of 7,500-8,000 yuan/mt, with an average of 7,750 yuan/mt, flat from a day ago. Pure nickel supply was still tight, and most traders awaited the opening of the import window. For nickel briquette, the prices stood between 220,700-221,800 yuan/mt, up 5,700 yuan/mt on a daily basis.

[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.]