SMM Evening Comments (Dec 15): Shanghai nonferrous metals ended mixed, lead fell 2.02%

SHANGHAI, Dec 15 (SMM) – SHFE nonferrous metals closed mixed on Tuesday December 15 as concerns over a coronavirus surge in multiple countries dulled optimism over the vaccine rollout in the US.

China’s industrial production grew 7% year-on-year in November, the country’s National Bureau of Statistics announced Tuesday.

Nickel, the best performer, rose 0.67%, tin advanced 0.42%, copper and zinc remained unchanged, while aluminium edged down 0.28%, and lead weakened 2.02%.

The ferrous complex rose across the board. Iron ore advanced 1.48%, rebar rose 1.17%, and hot-rolled coil climbed 0.6%.

Copper: The most-traded SHFE 2101 copper contract remained unchanged at 57,710 yuan/mt. Open interest fell 5,352 lots to 93,000 lots.

The pandemic continued to bring pessimism. The death toll in COVID-19 exceeded 300,000. The mayor of New York warned to prepare for a comprehensive blockade. In addition, London implemented the strictest pandemic prevention restrictions on Wednesday. It is widely expected that the Federal Reserve will provide new guidelines for the bond purchase program this week. Members from both parties have announced the details of the two-part $908 billion anti- pandemic relief program, and the anti- pandemic relief bill may be incorporated into it. Short-and medium-term monetary easing stimulus is still beneficial to the capital market.

The People's Bank of China (PBOC) is expected to put MLF funds into the net for the fifth consecutive month to escort the liquidity of the New Year. China's industrial and retail data released today are in line with expectations, and both are accelerating growth. Among them, the annual rate of China's total retail sales of consumer goods in November stood at 5%, and the annual rate of China's industrial added value above the designated size stood at 7%, both of which increased month on month, supporting copper prices to some extent.

The guidance of LME copper, US industrial production for November and whether the contract could move above five-day moving average will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2101 aluminium contract finished the day 0.28% lower at 16,230 yuan/mt. Open interest fell 5,081 lots to 118,752 lots. Operating rates at aluminium extrusion producers rose slightly from October at 63.10% in November. Operating rates at industrial extrusion producers rose 2.98 percentage points from October to 69.68%, and fell slightly to 61.84% at construction extrusion producers.

Zinc: The most-active SHFE 2101 zinc contract remained unchanged at 21,455 yuan/mt. Open interest fell 4,874 lots to 75,167 lots. On the fundamentals, TCs of zinc ore remained stable month on month, while the zinc ingot stocks remained low. The support from ten- and twenty-day moving average will be monitored in the near term. The contract is expected to keep fluctuating tonight.

Nickel: The most-traded SHFE 2102 nickel contract ended the day 0.96% higher at 131,480 yuan/mt today. Open interest rose 3,088 lots to 177,687 lots. Prices of medium-grade nickel ore remained at $75/wmt in November. Shipments from the Philippines, sold over the previous periods, declined sharply amid the rainy season and cargoes in the spot market thinned.

Lead: The most-traded SHFE 2101 lead contract ended the day 2.02% lower at 14,565 yuan/mt. Open interest rose 2,333 lots to 34,803 lots. Operating rates of the licensed secondary lead smelters in November stood at 55.11%, down 1.82% from October, SMM survey showed. Total capacity in the survey sample which included 34 producers stood at 4.61 million mt/year.

Tin: The most-liquid SHFE 2102 tin contract climbed to a session high of 153,770 yuan/mt and finished the day 0.42% higher at 151,560 yuan/mt today. Open interest fell 170 lots to 31,457 lots.