SMM Evening Comments (Dec 22): Shanghai Nonferrous Metals Closed mostly with Gains

SHANGHAI, Dec 22 (SMM) – Shanghai nonferrous metals closed mostly with gains. On the macro front, the expectations stemming from domestic policies have basically paid off. When it comes to the fundamentals, it is difficult to raise the overall risk asset valuation. Generally speaking, the base metals lack strong upside momentum.

Shanghai copper rose 0.27%, aluminium added 0.03%, lead gained 1.32%, zinc lost 0.58%, tin jumped 0.3%, and nickel climbed 1.61%.

Copper: The most-traded SHFE 2301 copper closed up 0.27% or 180 yuan/mt at 65,820 yuan/mt, with open interest down 7,087 lots to 96,957 lots.

In the spot market, volatile copper prices dampened the downstream demand, but the traders still held on to high premiums.

Aluminium: The most-traded SHFE 2301 aluminium closed up 0.03% or 5 yuan/mt at 18,635 yuan/mt, with open interest down 13,568 lots to 106,180 lots.

On the macro front, the Bank of Japan unexpectedly embarked on cancelling easy monetary policies, and joined the queue of raising the interest rate following the US and European countries, which weighed on the US dollar. On the fundamentals, the power rationing in south-west China contained the supply side, hence the aluminium output may fall short in December. On the demand side, the downstream consumption was sluggish amid the seasonal low. SHFE aluminium price is partly supported by low inventory that kept falling during the off-season, despite the weak demand. The spot premiums were kept at a high level amid tight supply in the spot market and the traders refraining from selling.

Lead: The most-traded SHFE 2301 lead closed up 1.32% or 205 yuan/mt at 15,735 yuan/mt, with open interest down 7,047 lots to 28,952 lots.

The traders actively made shipments, but the quotes were still firm amid insufficient sources available in the market, which contained downstream demand to some extent. In other words, it is difficult to find a buyer when the prices are high.

Zinc: The most-traded SHFE 2302 zinc closed down 0.58% or 135 yuan/mt at 23,285 yuan/mt, with open interest up 3,603 lots to 81,073 lots.

On the fundamentals, some smelters slowed the production with rising number of covid-infected employees, and the transportation efficiency also dropped. The transactions in the spot market, on the other hand, were moderate, and the social inventory dropped and will keep dropping in the near term. The support on the fundamentals has been relatively firm.

Tin: The most-traded SHFE 2301 tin closed up 0.3% or 590 yuan/mt at 195,110 yuan/mt, with open interest down 3,913 lots to 31,432 lots.

In the spot market, the smelters were cautious in making quotes in early trade, and some raised their offers. The premiums/discounts offered by the traders dropped slightly, but the market transactions were still muted. The downstream players purchased only on rigid demand, and the absolutely high prices contained the demand.

Nickel: The most-traded SHFE 2302 nickel closed up 1.61% or 3,480 yuan/mt at 218,960 yuan/mt, with open interest up 16,924 lots to 75,979 lots.

In the spot market, Jinchuan nickel was in premiums of 10,000-11,000 yuan/mt, with an average of 10,500 yuan/mt, down 250 yuan/mt on a daily basis. NORNICKEL nickel was in premiums of 7,500-7,700 yuan/mt, down 150 yuan/mt from the previous trading day. The shipments of Jinchuan nickel fell amid the downstream players restocking in a centralised way, and the supply in the market was relatively tight. For nickel briquette, the prices stood between 225,600-227,000 yuan/mt, up 5,050 yuan/mt from a day ago.

[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.]