SMM Evening Comments (Dec 27)

SHANGHAI, Dec 27 (SMM) – SHFE nonferrous and ferrous metals settled mostly lower on Thursday with aluminium leading the losses and dipping 1.3%. 

Nickel lost 0.43%, tin fell 0.18%, while zinc jumped 0.41%, copper rose 0.65%, and lead went up 0.99%. Hot-rolled coil decreased 1.01%, rebar slid 0.38%, and coke closed 0.21% lower. 

Copper: The SHFE 1902 contract opened at an intraday high of 48,620 yuan/mt, and slid below the daily moving average at noon as investors cut longs. With support at the 48,270 yuan/mt level, it ended at 48,280 yuan/mt, above the five-day moving average. Open interests lost 13,260 lots, and this lowered open interests across all SHFE copper contracts below 500,000 lots today. We see the 1902 contract testing resistance at 48,500 yuan/mt tonight. 

Aluminium: A significant decline in alumina prices lowered the SHFE 1902 contract to a low of 13,645 yuan/mt in the afternoon, as longs left. A loss of 14,456 lots of open interest ended the contract at 13,650 yuan/mt. The K-line from KDJ indicator fell below all moving averages and lost its gains during the week. We expect the contract to trade weakly tonight and test support below. 

Zinc: Falling longs depressed the SHFE 1902 contract fast after opening, to below the daily moving average and an intraday low of 20,730 yuan/mt. However, it remained above the Bollinger middle band and settled at 20,735 yuan/mt, with open interest down 17,162 lots. Current weak consumption will limit any upward momentum in prices. The contract is likely to test support at the Bollinger middle band tonight. 

Nickel: Resistance from the five-day moving average weighed the SHFE 1905 contract from a high of 89,100 yuan/mt, to an intraday low of 87,740 yuan/mt near closing. The contract ended at 87,960 yuan/mt, with open interests up 6,100 lots to 341,000 lots. As its KDJ indicator expanded downwards and the MACD red line shortened, it is expected to test support at 87,400 yuan/mt tonight. 

Lead: Risk aversion lowered short positions, and this pulled the SHFE 1902 contract to an intraday high of 17,995 yuan/mt after opening. As longs also exited the market, it dipped slowly and closed at 17,930 yuan/mt. Heavy pressure was seen at 18,000 yuan/mt. The contract is likely to consolidate around that level tonight.