SMM Evening Comments (Dec 29): Shanghai Nonferrous Metals Closed Mostly with Losses with Longs Paying off

SHANGHAI, Dec 29 (SMM) – Shanghai nonferrous metals closed mostly with losses with bulls stemming from loosening pandemic control in China paying off gradually.

Shanghai copper lost 0.14%, aluminium fell 1.35%, lead slid 1.55%, zinc edged down 0.02%, tin shed 0.2%, and nickel climbed 0.5%.

Copper: The most-traded SHFE 2302 copper closed down 0.14% or 90 yuan/mt at 66,430 yuan/mt, with open interest up 1,079 lots to 104,321 lots.

The number of players engaging in spot transactions dropped palpably from a day ago as there is only one complete trading day left before the New Year’s Day holiday. The discounts of mainstream standard-quality copper with next-month invoice stood at 150-130 yuan/mt in early trade, and then rose to around 100 yuan/mt amid falling sources.

Aluminium: The most-traded SHFE 2302 aluminium closed down 1.35% or 255 yuan/mt at 18,685 yuan/mt, with open interest down 5,064 lots to 149,662 lots.

The fundamentals offered little support to aluminium prices. On the supply side, the aluminium output is likely to fall short in December due to the power rationing in south-west China. On the demand side, the downstream processing sectors are in the seasonal low, and the spiking covid infections further weighed on the operating rates. Today, both SMM aluminium ingot and billet inventory accumulated, failing to underpin aluminium price.

Lead: The most-traded SHFE 2302 lead closed down 1.55% or 250 yuan/mt at 15,905 yuan/mt, with open interest down 5,106 lots to 71,861 lots.

In the spot market, the cargo holders rarely made shipments approaching the year-end, and the discounts narrowed. The downstream players still stood on the sidelines, and the trading market was quiet as a whole.

Zinc: The most-traded SHFE 2302 zinc closed down 0.02% or 5 yuan/mt at 23,800 yuan/mt, with open interest down 2,008 lots to 88,973 lots.

SHFE zinc rose recently boosted by the macro front, and gradually stabilised after the longs paid off. The support of SHFE zinc is worth attention.

Tin: The most-traded SHFE 2302 tin closed down 0.2% or 410 yuan/mt at 207,690 yuan/mt, with open interest down 7,557 lots to 45,883 lots.

In the spot market, high market prices greatly contained downstream demand, especially when the downstream players have finished year-end restocking. SHFE warrants inventory added 167 mt to 4,397 mt.

Nickel: The most-traded SHFE 2302 nickel closed up 0.5% or 1,150 yuan/mt at 228,890 yuan/mt, with open interest down 966 lots to 80,402 lots.

In the spot market, Jinchuan nickel was in premiums of 7,000-8,000 yuan/mt, with an average of 7,500 yuan/mt, down 1,000 yuan/mt on a daily basis. NORNICKEL nickel was in premiums of 6,000-6,500 yuan/mt, with an average of 6,250 yuan/mt, down 900 yuan/mt on a daily basis. The upstream players were more willing to sell approaching the end of the month, hence the spot premiums kept falling. But the overall transactions were still weak. For nickel briquette, the prices stood between 233,000-233,800 yuan/mt, down 700 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.]