SMM Evening Comments (Nov 9)

SHANGHAI, Nov 9 (SMM) – SHFE base metals ended Friday in mixed performance. Tin saw the best performance, up 1.75%. Zinc gained over 1%, lead increased by 0.76% while copper dropped 0.55%, nickel and aluminium slipped some 0.4%.

The ferrous complex, except for iron ore, closed in negative territory. Rebar lost close to 0.2%, coke and coking coal fell by some 0.3% and hot-rolled coil decreased by over 1.4% while iron ore surged close to 2%.

Copper: Aggressive short-covering forced the SHFE 1901 contract to give up overnight gains to post a five-day losing streak, closing at 49,180 yuan/mt with open interest up 7,392 lots to 189,842 lots. The day's lows stood below the 60-day moving average and near the lower Bollinger band while KDJ lines converged. Market participants should monitor if the contract holds on to its current levels tonight.

Zinc: While the SHFE 1901 contract, tracking losses in its LME counterpart, retreated from the day's highs of 21,085 yuan/mt to close at 20,930 yuan/mt, it rose from yesterday's close. The contract stood above the 60-day moving average, facing resistance at the 40-day moving average. Gains in social inventories across Shanghai, Guangdong and Tianjin as well as rising spot premiums are likely to provide some support to SHFE zinc prices. The contract is expected to test the 40-day moving average tonight.

Nickel: As gains in the US dollar encouraged shorts to build their positions, the SHFE 1901 contract fell into the negative territory to close at 96,310 yuan/mt after trading rangebound below 7,100 yuan/mt. Its KDJ lines converged while the MACD green line barely changed. Market participants should monitor if the contract holds on to the 96,000 yuan/mt level tonight.

Lead: The SHFE 1812 contract ended in the black at 18,550 yuan/mt, but relinquished most of its overnight gains during the day, suggesting limited steam in the contract. We expect it to continue its weak performance tonight and test the support at the five-day moving average.

Tin: The SHFE 1901 contract extended its overnight gains to close near the day's highs of 149,700 yuan/mt in anticipation of supply constraints. News of annual maintenance at Yunnan Tin Group bolstered tin prices. The contract is expected to remain robust into the near term and to test resistance at 150,000 yuan/mt.