SMM Evening Comments (Dec 3)

SHANGHAI, Dec 3 (SMM) – The SHFE nonferrous and ferrous complexes increased across the board on Monday as coke led the gains and surged 5.49%. 

Zinc closed 3.82% higher, aluminium grew 1.54%, lead jumped 1.34%, copper rose 1.33%, nickel went up nearly 1%, and tin nudged up. 

Coking coal and iron ore increased over 3%, rebar jumped nearly 3%, and hot-rolled coil closed 2.58% higher. 

Copper: The SHFE 1902 contract registered a fourth consecutive day of increase and stood above the Bollinger higher band, buoyed by Sunday’s reports that US President Donald Trump and Chinese President Xi Jinping will temporarily halt the imposition of new tariffs. The contract jumped to an intraday high of 50,740 yuan/mt in two minutes after opening. It settled 1.47% higher on the day at 50,280 yuan/mt, with open interests up 6,004 lots to 177,000 lots. As its KDJ indicators expanded upwards, and the MACD red line lengthened, the contract is expected to test support at 50,000 yuan/mt tonight. Investors would take more guidance tonight from the movement in prices of LME copper. 

Aluminium: The SHFE 1901 contract climbed above five-, 10-, and 20-day moving averages, tested pressure at the 40-day average, and closed 210 yuan/mt higher at 13,810 yuan/mt. Investors cutting their shorts pulled up the contract. Open interests lost 41,708 lots to 196,000 lots. We expect it to test support at the five-day moving average tonight. 

Zinc: Macroeconomic optimism bolstered the SHFE 1902 contract above the 10-, 20-, and 60-day moving averages, to a high of 21,275 yuan/mt. It closed at 20,820 yuan/mt with open interests up 1,156 lots to 180,000 lots. Current low-level inventories and improved risk aversion are likely to see the contract hovering around the 60-day moving average tonight.

Nickel: The SHFE 1901 contract surged to the highest in ten trading days at 93,910 yuan/mt after opening, on potential truce in the trade war between the world’s two largest economies. With support at the daily moving average, the contract consolidated around 92,180 yuan/mt and closed higher on the day at 91,800 yuan/mt. Its KDJ indicators expanded upwards, and the MACD green line lengthened today. Key data to monitor tonight include the US Markit manufacturing purchasing managers index (PMI) for November. 

Lead: Surging longs pulled the SHFE 1901 contract up to a high of 18,765 yuan/mt after opening, as base metals rose across the board. When some longs took profits and left, the contract hovered above the daily moving average, around 18,570 yuan/mt, and ended at that level. Standing above the Bollinger upper band, it faced heavy pressure at 18,800 yuan/mt. Limited upward momentum will keep it trading around 18,500 yuan/mt tonight.  

Tin: The SHFE 1901 contract rebounded after nine consecutive trading days of decline. It closed above the five-day moving average at 144,700 yuan/mt, amid improved market sentiment. It faced resistance above at 146,500 yuan/mt. There is further upward room in the short run.