Risk On Sentiment Dominates

On the copper mine supply side, Antofagasta’s Centinela copper mine will offer a new wage package on Monday to the Distrito union in an attempt to resolve the remaining differences. The union rejected the management’s last wage offer on Friday and is the only union at the mine which has still not accepted the company's offer. However, if both parties fail to reach an agreement, the union with 270 members could begin to strike on Tuesday.

China last week posted strong growth in both exports and domestic car sales in November which added to the bullish view on metal demand. November car sales grew by 7.6% month-on-month (or 12.6% year-on-year), although total sales during the first 11 months were 22.47 million units, down by 2.9% year-on-year, according to the China Association of Automobiles Manufacturers (CAAM). The secretary-general of the CAAM expects total car sales to register a 2% decline for the full year 2020 which is far better than expected at the start of the year. As for the higher copper intensity new energy vehicles, sales surged by 24.1% MoM in November to 200,000 units which brings total sales in the first 11 months to over 1.1 million units (+105% YoY). November imports of unwrought copper and copper alloys together fell by 9% month-on-month to 561kt which leaves total imports over the first 11 months to 6.2 million tonnes (+38.7% YoY). This marks the second month of import contraction, which is chiefly due to fewer import arbitrage opportunities.

In the aluminum market, investors continued to closely watch inventory changes in China's physical market as the latest data still points to a moderate decline, suggesting firm demand. As we noted last week, domestic alumina market prices have started to diverge between the northern and southern markets as winter cuts led to forced cutbacks at alumina refineries.

In the zinc market, an accident (18 November) at Vedanta’s Gamsberg mine has led to some closures of zinc mines in Northern China to keep the concentrate market tight. Spot treatment charges for zinc remain depressed for both import and domestic concentrate. As per the latest reports, a major smelter and an another medium-sized smelter have both chosen to run maintenance. Meanwhile, total refined zinc social inventories (three major cities) gained over 3% totaling 139.8kt according to the latest data on Monday.

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