SMM Evening Comments (May 29)

SHANGHAI, May 29 (SMM) – SHFE nonferrous metals declined across the board with nickel led the losses and ended 2.1% lower. Copper slid 0.9%, aluminium and lead fell 0.7%, zinc dipped 0.5%, and tin eased 0.1%. 

The ferrous complex closed mostly lower as iron ore dropped 1.6%, coke slipped 1.1%, rebar lost 0.5%, while hot-rolled coil went flat, and coking coal grew 0.1%. 

Copper: As longs continued to cover their positions and moved to the SHFE back-month contracts, the most-liquid SHFE July contract dipped to an intraday low of 46,790 yuan/mt, and ended 0.89% lower on the day at 46,810 yuan/mt. Open interests lost 1,830 lots to 226,000 lots, while open interests across the August and September contracts gained 8,226 lots. Bearish signs from the KDJ indicators may see the July contract testing support from 46,800 yuan/mt tonight. 

Aluminium: The most-active SHFE July contract failed to rebound considerably after exiting longs and greater shorts dragged it to an intraday low of 14,165 yuan/mt in early trades. It dipped to the Bollinger middle band and ended the trading day 0.67% lower at 14,170 yuan/mt. As the MACD green line lengthened and the KDJ indicators expanded downwards, the contract is likely to trade between 14,170-14,240 yuan/mt tonight. 

Zinc: The most-traded SHFE July contract recovered some ground after it slid to a low of 20,520 yuan/mt, but growing shorts kept it from exceeding 20,640 yuan/mt and settled it 0.53% lower on the day at 20,575 yuan/mt. A lack of confidence in longs will see the contract hovering between the five- and 20-day moving averages tonight. 

Nickel: While base metals fell across the board, nickel led the losses with a decline of 2.06%, as the most-traded SHFE July contract traded with pressure from the daily moving average after a sharp decline overnight. As the KDJ indicators expanded downwards and the MACD red line shortened, the contract may struggle to stand above the 10-day moving average tonight. 

Lead: The most-active SHFE July contract lost support from the 16,000 yuan/mt level as shorts weighed it to a low of 15,865 yuan/mt before noon. It rebounded to around 16,010 yuan/mt, and finished the trading day 0.65% lower at 15,945 yuan/mt. Pressure from shorts will keep the contract weak tonight, with support from 15,800 yuan/mt. 

Tin: The most-traded SHFE September extended its rangebound trend from overnight, with continued pressure from the 20-day moving average. It lost 0.1% on the day and closed at 145,500 yuan/mt. Pressure above is expected at 146,200 yuan/mt tonight.