SMM Evening Comments (Dec 28): Shanghai Nonferrous Metals Closed Mostly with Gains on Market Optimism

SHANGHAI, Dec 28 (SMM) – Shanghai nonferrous metals closed mostly with gains on relatively optimistic market sentiment. In China, the National Health Commission downgraded the pandemic control level from the highest A Category to the less tight B Category, boosting market sentiment.

In the US, recent economic readings, including the November CPI and PCE, showed subsiding inflation pressure as a whole, reinforcing market expectations of slowing rate hikes by the US Fed.

Shanghai copper added 0.17%, aluminium fell 0.63%, lead gained 0.78%, zinc advanced 1.29%, tin jumped 4.77%, and nickel climbed 2.8%.

Copper: The most-traded SHFE 2302 copper closed up 0.17% or 110 yuan/mt at 66,440 yuan/mt, with open interest up 1,348 lots to 103,242 lots.

In the spot market, the premiums in Shanghai dropped again approaching the year-end, and the downstream players were less interest in buying. The discounts of mainstream standard-quality copper with next-month invoice stood at 80 yuan/mt in early trade, and expanded further as some traders manipulated the market price at around 10 o’clock in the morning. The discounts expanded further to 150-130 yuan/mt in the second trading session. Nonetheless, the sources were scarce as a whole.

Aluminium: The most-traded SHFE 2302 aluminium closed down 0.63% or 120 yuan/mt at 18,785 yuan/mt, with open interest down 13,832 lots to 154,726 lots.

On the fundamentals, the domestic aluminium supply growth is likely to fall short of expectations amid power rationing in south-west China. On the consumption side, the downstream processing sectors were in the seasonal low, and the operating rates were further weighed on by the spiking number of covid-infected employees. The aluminium social inventory was still at a low level despite the mild accumulation.

Lead: The most-traded SHFE 2302 lead closed up 0.78% or 125 yuan/mt at 16,185 yuan/mt, with open interest up 2,709 lots to 76,967 lots.

In the spot market, some traders have completed their year-end sales target, and there existed almost no quotations with super low discounts, while some quoted with discounts. Nonetheless, the downstream players were generally wait-and-see, and mostly of which purchased in the form of long-term orders. The spot market was quiet as a whole.

Zinc: The most-traded SHFE 2302 zinc closed up 1.29% or 305 yuan/mt at 23,965 yuan/mt, with open interest down 1,116 lots to 90,981 lots.

The market was relatively bullish with the returning of human flow and market animation, in addition to the relatively low social inventory.

Tin: The most-traded SHFE 2302 tin closed up 4.77% or 9,520 yuan/mt at 209,270 yuan/mt, with open interest up 5,812 lots to 53,440 lots.

In the spot market, the spread among quotes offered by the smelters expanded. Some smelters did not make quotes out of cautiousness, while some quoted with discounts in order to promote the sales. The premiums/discounts offered by the traders dropped slightly, but the transactions in the spot market were poor. Nonetheless, some traders were active in placing orders. SHFE warrants inventory added 79 mt to 4,230 mt.

Nickel: The most-traded SHFE 2302 nickel closed up 2.8% or 6,220 yuan/mt at 228,250 yuan/mt, with open interest down 2,719 lots to 81,368 lots.

In the spot market, Jinchuan nickel was in premiums of 8,000-9,000 yuan/mt, with an average of 8,500 yuan/mt, down 1,750 yuan/mt on a daily basis. NORNICKEL nickel was in premiums of 6,800-7,500 yuan/mt, with an average of 7,150 yuan/mt, down 250 yuan/mt from the previous trading day. The premiums fell slightly as the traders were more willing to sell approaching the end of the year, but the actual transactions fell short amid high SHFE price. For nickel briquette, the prices stood between 233,100-235,100 yuan/mt, up 6,150 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.]