SMM Evening Comments (Feb 15)

SHANGHAI, Feb 15 (SMM) – SHFE base metals ended mostly lower on Friday February 15 as nickel led the decline and lost 1.96%. Tin dipped 0.30%, zinc fell 0.28%, copper declined 0.27%, aluminium went flat, while lead rose 0.48%.

The ferrous complex also closed lower as rebar dropped 2.47%, hot-rolled coil lost 1.78%, and coke fell 1.57%. 

Copper: Accumulated shorts weighed on the SHFE 1904 contract after it rose to a high of 48,480 yuan/mt in the early trades. The contract unsuccessfully tested pressure at the daily moving average, and closed at 48,200 yuan/mt after it dipped to an intraday low of 48,150 yuan/mt. Open interests grew 4,800 lots to 184,000 lots. Higher-than-expected new yuan loans and social financing for January are likely to support prices tonight. We see the contract testing pressure at 48,300 yuan/mt tonight. 

Aluminium: As both longs and shorts exited the market, the SHFE 1903 contract rose along the five-day moving average, and hit a high of 13,400 yan/mt near closing. It settled at 13,385 yuan/mt with open interests down 8,490 lots to 224,000 lots. As the K indicator remained below all moving averages, except for the five-day moving average, the weak trend in the contract may continue tonight. The SHFE 1902 contract was delivered today, with a closing price at 13,360 yuan/mt and delivery volume at 95,000 mt. 

Zinc: A rise of shorts limited the upward momentum in the SHFE 1904 contract, which declined after it climbed to a high of 21,545 yuan/mt. It found support at the 20-day moving average, and closed at 21,235 yuan/mt, with open interests up 11,712 lots to 173,000 lots. While a stronger LME zinc may pull the contract tonight, pressure from growing inventories will cap the increase. 

Nickel: Prices of nickel led the decline across base metals as shorts weighed the SHFE 1905 contract from a high of 97,730 yuan/mt, and ended it 1,930 yuan/mt lower on the day at 96,650 yuan/mt. Open interests accumulated by 9,000 lots to 299,000 lots. As the KDJ indicators expanded downwards and the MACD red line shortened, the contract is likely to test support at the 20-day moving average tonight. 

Lead: The SHFE 1903 contract jumped above the five-day moving average with support at the daily moving average today. It closed at 16,870 yuan/mt with open interests down 830 lots to 39,102 lots. The SHFE 1902 contract was delivered with a settlement price of 16,770 yuan/mt and delivery volume of 11,850 mt. 

Tin: The SHFE 1905 contract hovered within a broad range around the 10- and 20-day moving averages. With resistance at the five-day moving average and a loss of longs, it ended at 148,300 yuan/mt, falling from an intraday high of 148,880 yuan/mt before noon. We expect it to face pressure at 149,300 yuan/mt with support at 147,000 yuan/mt in the short run.