SMM morning comments (December 27): Base metals fell amid expectations of Fed_SMM tightening monetary policies

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SHANGHAI, Dec. 27 (SMM) – Shanghai base metals mostly showed an uptrend on Monday morning. The LME market is closed for the Christmas holidays today.

LME Metals closed with losses in trade last Friday. Copper fell 0.44%, aluminum 0.98% and zinc 0.03%.

SHFE metals closed mixed in overnight trading last Friday. Copper rose 0.07%, aluminum fell 0.74%, lead fell 0.58%, zinc rose 0.14%, and nickel lost 1,000 yuan / mt. .

The copper: The three-month LME copper opened at $ 9,605 / mt in overnight trading last Friday, hitting low and high levels at $ 9,561.5 / mt and $ 9,607 / t respectively, and closed down 0.44% at $ 9,597 / mt. The trading volume was 2,429 lots and the open interest was 248,000 lots. The LME market is closed for the Christmas holidays today.

The SHFE 2202 copper contract opened at 69,770 yuan / mt last Friday, falling to a low of 69,490 yuan / mt, then rebounding to 69,920 yuan / mt. It closed at 69,840 yuan / mt, up 0.07%. The trading volume was 20,000 lots and open interest was 142,000 lots. SHFE copper is expected to trade between 69,300 and 70,000 yuan / tonne today, with spot prices ranging from a discount of 20 yuan / tm and a premium of 60 yuan / tm.

The global economic market will frequently be closed for the Christmas and New Year holidays. SHFE copper has moved lower on expectations of the Fed’s tightening monetary policy. Spot owners wanted to raise funds at the end of the year and the market demand for current month bills has declined. The premiums rapidly declined to a level close to the fixed level. However, the holders refused to lower the prices following the discounts on the last trading day of the long-term orders of the year. As a result, prices have held up at narrow premiums despite the scarcity of transactions.

Aluminum: The three-month LME aluminum opened at $ 2,845 / mt last Friday and closed at $ 2,820 / mt, down $ 28 / mt or 0.98%.

The most traded SHFE 2202 aluminum contract opened at 20,265 yuan / t during last Friday’s overnight session, with the lowest and highest at 19,960 yuan / mt and 20,275 yuan / mt before closing at 20,035 yuan / mt, down 150 yuan / mt, or 0.74%.

The cost of electricity, raw materials and auxiliary materials for domestic aluminum smelters has fallen. In December, the prices of thermal coal and alumina continued to fall, and the cost of foundries fell below 18,000 yuan / t. Bulls lack confidence. However, in the short term, aluminum prices will remain high due to the drop in production abroad and the continued destocking of national social stocks. Aluminum prices may also face downside risks. Attention should be paid to the potential alleviation of natural gas shortages in the future and to supplying regions with lower energy costs.

Lead: The LME market will be closed on December 27 and 28 for the Christmas holidays.

The most liquid SHFE 2201 lead contract opened at 15,465 yuan / mt and bottomed at 15,320 yuan / mt, before closing at 15,360 yuan / mt, down 0.58%. Open interest increased from 1,333 lots to 43,871 lots.

Zinc: Three-month LME zinc fell 0.03% to $ 3,517 / mt last Friday, with open interest rising from 2,005 lots to 249,000 lots. LME stocks in LME-listed warehouses decreased by 175 mt or 0.09% to 203,225 mt. LME zinc edged down as the holiday approached and trading cleared.

The most liquid SHFE 2202 zinc contract rose 0.14% to 24,395 yuan / mt, with open interest declining from 310 lots to 107,400 lots. The prices of natural gas in Europe continued to rise. Foundries in Europe have suspended production amid severe energy supply. Galvanizing plants in northern China were subject to environmental protection while operating rates in Tangshan, Hebei fell sharply. Orders from die-casting plants declined due to high zinc prices. The absolute price will always be determined by foreign fundamentals as a whole. The most traded zinc contract is expected to hover between 24,000 and 24,500 yuan / t today, and Shuangyan’s No. 0 domestic zinc could trade at premiums of 10 to 30 yuan / t compared to the January contract.

Tin: The SHFE 2201 tin contract surged after the opening in last Friday’s night session, but then quickly fell back and fluctuated around 288,000 yuan / ton. Domestic stocks declined significantly last week, while overseas stocks rebounded. Aggregate supply and demand are expected to maintain a balance.

SHFE tin will continue to hover sideways amid stable supply and demand.

Nickel: SHFE’s nickel contract lost 1,000 yuan / mt to close at 147,710 yuan / mt during overnight trading. Trading volumes decreased from 72,000 lots to 126,000 lots and open interest decreased from 7,000 lots to 146,000 lots. SHFE nickel prices ended a four-day winning streak. From the current fundamental perspective, the import window is open and the supply of nickel in the spot market is increasing. On the demand side, demand for stainless steel and nickel sulfate is expected to be weak. And the price support for nickel is insufficient. SHFE nickel prices are expected to fluctuate between 143,000 and 151,000 yuan / t this week and LME nickel prices are expected to fluctuate between $ 19,600 and $ 20,350 / t.


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