SMM Evening Comments (Jan 30)

SHANGHAI, Jan 30 (SMM) – SHFE nonferrous metals closed mostly higher on Wednesday January 30 as domestic supportive policies on consumption improved market sentiment. Nickel led the increases and closed nearly 2.7% higher. Tin grew some 0.5%, copper increased 0.4%, aluminium gained almost 0.2%, while zinc edged down, and lead fell some 1.2%

The ferrous complex ended mix as iron ore jumped 5.58%, rebar and hot-rolled coil went up 0.1%, while coke declined 0.4%, and coking coal slid 0.7%.

Copper: The SHFE 1903 contract stood firm above the five- 10-, 20-day moving averages and the Bollinger middle band, though pressure at the daily moving average remained. It hovered in a narrow range today, and fell to a low of 47,650 yuan/mt near closing after it temporarily broke resistance at the daily moving average. An increase of 1,510 lots to 179,000 lots in open interests ended the contract at 47,700 yuan/mt. Tonight, we expect that upward momentum will buoy the contract to test the 48,000 yuan/mt level above. 

Aluminium: A lack of support from fundamentals lowered the SHFE 1903 contract from a high of 13,525 yuan/mt in the first trading session for the morning. Prices stemmed decline at the 13,440 yuan/mt level in the afternoon. It lost part of the overnight gains, to close at 13,460 yuan/mt. Open interests accumulated by 3,550 lots to 230,000 lots. Its daily KDJ indicator remained in a downward trend, and this is likely to see the contract trade weakly, rangebound tonight. The ongoing US-China trade negotiations will determine market sentiment tonight. 

Zinc: After it received support twice at a low of 21,600 yuan/mt, the SHFE 1903 contract climbed above the daily moving average to a high of 21,805 yuan/mt, as longs entered. However, poor downstream demand ahead of CNY saw longs took profits and left near closing, and this ended the contract at 21,805 yuan/mt. Open interests shrank sharply by 12,902 lots to 201,000 lots. With limited upward momentum, the contract is expected to hover below the Bollinger upper band tonight. 

Nickel: Higher ferrous complex and a weaker US dollar buoyed confidence across longs, and this pulled the SHFE 1905 contact to a high of 97,890 yuan/mt today. The contract closed at 97,480 yuan/mt, with an influx of capitals of 340 million yuan across all SHFE nickel contracts, topping the SHFE base metals. As the KDJ indicator expanded upwards and the MACD red line lengthened, the 1905 contract is likely to test pressure above at 98,500 yuan/mt tonight. 

Lead: A weakened LME lead dragged the SHFE 1903 contract below the 10-day moving average, and settled it lower for the second consecutive trading day, at 17,500 yuan/mt. Its lowest level today stood at 17,490 yuan/mt near closing. Tonight, the contract is expected to test support at 17,500 yuan/mt. 

Tin: The SHFE 1905 contract extended its upward trend overnight, as it rose to a high of 148,800 yuan/mt near closing and settled at 148,620 yuan/mt. Exiting shorts accounted for the increase. Currently at the five- and 10-day moving average, the contract will trade rangebound with support at the 60-day moving average tonight.