SMM Evening Comments (Dec 6)

SHANGHAI, Dec 6 (SMM) – SHFE nonferrous metals fell for the most part on Thursday with aluminium leading the losses and closing 1.01% lower. Copper lost 0.89%, tin dipped 0.77%, lead slid 0.51%, nickel went down 0.47%, while zinc nudged up.

The ferrous complex also weakened mostly as coke slumped 2%, rebar dropped 0.98%, and hot-rolled coil closed 0.42% lower. 

Copper: The SHFE 1902 contract registered the third consecutive trading day of decline and failed to receive support at all moving averages. It opened at a low of 49,170 yuan/mt this morning after a slump in the US stock market overnight.  As shorts accumulated, the contract lost support at the 49,000 yuan/mt level in the afternoon, and closed at an intraday low of 48,980 yuan/mt. Currently below the Bollinger middle band, the contract will test support at 49,000 yuan/mt tonight. 

Aluminium: The SHFE 1901 contract dipped below the daily moving average after opening, and lost nearly all the gains since last Monday to settle at an intraday low of 13,590 yuan/mt. Open interests shrank 1,182 lots to 196,000 lots as investors cut their longs and added shorts. We expect it to trade weakly tonight with pressure at the 40-day moving average. 

Zinc: The SHFE 1902 contract rebounded after it slumped to a low of 20,815 yuan/mt in the morning, pressured by its lower LME counterpart. With pressure from the daily moving average, it closed at 20,920 yuan/mt, with open interests up 2,178 lots. Limited support from fundamentals will likely keep the contract hover around the 60-day moving average tonight. 

Nickel: The SHFE 1905 contract faced resistance from the daily moving average and a higher US dollar, but received support at the 90,000 yuan/mt level. It closed at 90,340 yuan/mt after shorts depressed it to a low of 90,130 yuan/mt. We expect it to test support at 90,000 yuan/mt tonight. Investors would take more cues tonight from the US weekly initial jobless claims, durable goods orders and factory orders for October. 

Lead: As shorts entered the market amid falling base metals contracts, the SHFE 1901 contract dipped to around the five-day moving average, with the lowest level at 18,430 yuan/mt. It settled at 18,465 yuan/mt with open interests up 528 lots. Further downward room is expected tonight. 

Tin: Pessimistic macroeconomic sentiment weighed the SHFE 1901 contract to a low of 144,080 yuan/mt. It closed 1,130 yuan/mt lower on the day at 144,500 yuan/mt. Macroeconomic uncertainty will pressure the contract in the short run. Support below is expected at 143,000 yuan/mt.