SMM Evening Comments (Dec 1): Shanghai Nonferrous Metals Closed with Gains on Improving Market Outlook

SHANGHAI, Dec 1 (SMM) – Shanghai nonferrous metals closed with gains as Fed Chairman Powell said in a speech yesterday that the Fed is prepared to slow down rate hikes at the December meeting. The market environment is expected to pick up in the future.

Shanghai copper gained 1.7%, aluminium rose 1.49%, lead jumped 0.06%, zinc added 2.92%, tin advanced 0.94%, and nickel climbed 1.86%.

Copper: The most-traded SHFE 2301 copper closed up 1.7% or 1,100 yuan/mt at 65,890 yuan/mt, with open interest up 4,386 lots to 151,706 lots.

On the macro front: (1) Fed Chairman Powell said in a speech yesterday that the Fed is prepared to slow down rate hikes at the December meeting. (bullish ☆). (2) China November official manufacturing PMI came in at 48, with a previous value of 49.2 and a forecast of 49 (bearish ☆)

In the spot market, the premiums of mainstream standard-quality copper were dragged on by the inflow of imported copper as well as the supply of low-quality copper.

Aluminium: The most-traded SHFE 2301 aluminium closed up 1.49% or 280 yuan/mt at 19,125 yuan/mt, with open interest up 21,737 lots to 221,681 lots.

The domestic operating aluminium capacity rose slightly in recently. Orders in the aluminium processing sectors continued to fall in the traditional off-season. Although relaxed pandemic controls boosted market sentiment, relatively poor fundamentals will prevent aluminium prices from rising. Thus, the short-term aluminium prices may move rangebound.

Lead: The most-traded SHFE 2301 lead closed up 0.06% or 10 yuan/mt at 15,750 yuan/mt, with open interest down 1,779 lots to 81,576 lots.

On the consumption side, a few lead-acid battery companies reported fall in orders due to spreading pandemic and the beginning of seasonal low. But they maintained the production as the in-plant stocks fell significantly in September and October, and the restocking demand before the Chinese New Year will boost the sales. But the production could still be weighed on if the orders fall further. The transportation of lead ingot is till hindered by the pandemic.

Zinc: The most-traded SHFE 2301 zinc closed up 2.92% or 695 yuan/mt at 24,500 yuan/mt, with open interest up 12,629 lots to 123,031 lots.

Though the market sentiment was boosted, the market situation was still challenged by the seasonal low. The longs cooled down, while SHFE zinc broke the range and rose as a whole.

Tin: The most-traded SHFE 2301 tin closed up 0.94% or 1,740 yuan/mt at 186,760 yuan/mt, with open interest up 2,500 lots to 52,934 lots.

In the spot market, the downstream players were strongly wait-and-see amid rising SHFE tin priced, and the transactions were relatively poor. SHFE warrants added 52 mt to 3,951 mt today, and LME tin inventory fell 120 mt to 3,080 mt.

Nickel: The most-traded SHFE 2301 nickel closed up 1.86% or 3,690 yuan/mt at 202,440 yuan/mt, with open interest down 4,203 lots to 78,332 lots.

Pure nickel was quoted against SHFE 2301 today. In the spot market, Jinchuan nickel was in premiums of 8,000-8,100 yuan/mt, with an average of 8,050 yuan/mt, up 2,550 yuan/mt from a day ago. NORNICKEL nickel was in premiums of 5,600-6,000 yuan/mt, with an average of 5,800 yuan/mt, up 2,900 yuan/mt on a daily basis. SHFE nickel maintained momentum today amid the dovish Fed voices yesterday. The spot premiums were relatively stable after excluding the SHFE 2212 and 2301 spread. For nickel briquette, the prices were between 203,600-205,500 yuan/mt.

[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.]