SMM Evening Comments (Mar 1)

SHANGHAI, Mar 1 (SMM) – SHFE nonferrous metals ended mostly higher on Friday March 1 after they increased in the afternoon. Lead climbed 2.8%, nickel gained almost 2.5%, zinc rose nearly 2.3%, copper increased some 0.5%, tin grew 0.4%, while aluminium edged down. 

The ferrous complex rose across the board as iron ore jumped 3.7%, coke went up 2.3%, rebar increased 2.2%, hot-rolled coil grew 2.1%, and coking coal closed 1.6% higher. 

Copper: The SHFE 1904 contract ceased its three consecutive trading days of decline as support from the five-day moving average and exiting shorts lifted it near closing, settling it 240 yuan/mt higher on the day at 50,500 yuan/mt. Open interests shrank 7,460 lots to 225,000 lots, and this lowered open interests across all SHFE copper contracts by 842 lots, to 671,000 lots. Tonight, the 1904 contract is likely to test resistance at 50,600 yuan/mt. 

Aluminium: The SHFE 1905 contract fell below the five-day moving average, to a week low at 13,610 yuan/mt in early trades. A buildup of longs buoyed it in the afternoon, and ended it at 13,685 yuan/mt. Despite expectations of consumption boom in March-May, expanding inventories and falling prices of alumina will limit any upward momentum in the contract tonight. 

Zinc: A loss of shorts pulled the SHFE 1904 contract to the highest since July 2018, and settled it at 22,300 yuan/mt. This followed after it consolidated around 21,880 yuan/mt in the morning. Open interests declined 2,508 lots to 226,000 lots. Given current high levels of social inventories, prices are likely to moderate tonight. 

Nickel: Macroeconomic sentiment improved and bolstered the SHFE 1905 contract in the afternoon, ending it at almost the highest level today at 104,740 yuan/mt. Open interests dropped 9,000 lots to 312,000 lots, with exiting shorts accounting for the decline. As the KDJ indicators expanded upwards and the MACD red line lengthened, the contract is likely to test support at the Bollinger upper band tonight. 

Lead: The SHFE 1904 contract hovered above the daily moving average today and jumped to a high of 17,845 yuan/mt before it ended at 17,780 yuan/mt. Open interests shrank 2,774 lots to 45,256 lots, with shorts accounted for most of the decline. Technical support is expected to keep it at highs tonight, with fundamentals capping its upward room. 

Tin: The SHFE 1905 contract rebounded above the daily moving average after slid to an intraday low of 150,220 yuan/mt, below the 10-day moving average. It closed at 151,070 yuan/mt with open interests down 364 lots, to 34,322 lots. The 150,000 yuan/mt level is likely to provide continued support tonight.