SMM Evening Comments (Jan 8): Zinc led the increase among base metals

SHANGHAI, Jan 8 (SMM) – SHFE nonferrous metals, except for copper, closed higher on Wednesday. Zinc was the best performer, closing up 1.52%. Aluminium added 0.53%, lead increased 1.18%, nickel advanced 1.02%, tin climbed 0.59%, while copper shed 0.04%. 

The ferrous complex extended their increases as iron ore rose 2.1%, rebar grew 1.34%, hot-rolled coil added 1.56%, stainless steel gained 0.4%, and coke increased 1.33%.

Copper: Shanghai copper edged lower as safe-haven demand intensified after news of Iran’s missile attack on US-led forces in Iraq early on Wednesday. The most-traded SHFE 2003 contract hit an intraday high of 48,970 yuan/mt before it slipped to finish 0.04% lower on the day at 48,860 yuan/mt, relinquishing gains from the previous two sessions. Risk aversion sentiment lifted CMX gold above $1,600/oz. As the MACD green line continued to lengthen, indicating greater technical pressure, the contract is expected to test support from 48,800 yuan/mt tonight. 

Aluminium: The most-liquid SHFE 2002 contract recovered losses from the previous day as departing shorts lifted the contract above 20-, five-, and 10- day moving averages, to an intraday high of 14,190 yuan/mt. It finished the day 0.53% higher at 14,155 yuan/mt. Weakened consumption pre-holiday grew the risk of further buildup in inventories, but a robust LME aluminium may offer some support to Shanghai aluminium. 

Zinc: The most-traded SHFE 2003 contract breached the daily moving average to hit a high of 18,410 yuan/mt and pared some gains to close higher for the third consecutive day, by 1.52% at 18,365 yuan/mt. Loaded-up longs accounted for the increase as the open interest added 15,786 lots to 105,000 lots. Nonetheless, pressure above from 18,500 yuan/mt and uncertainty around geopolitical turmoil will limit its upward momentum tonight. 

Nickel: The most-liquid SHFE 2003 contract continued its price rally after the decline last Friday. It closed slightly higher above the daily moving average, rising 1.02% on the day at 109,230 yuan/mt, after hitting an intraday low of 107,900 yuan/mt. Pressure above from the five-day moving average will be monitored tonight. 

Lead: Continued short-covering pushed Shanghai lead higher for the third straight day, as the most-active SHFE 2002 contract climbed to an intraday high of 14,965 yuan/mt and ended up 1.18% on the day at 14,960 yuan/mt. Open interest shrank 3285 lots to 23480 lots. Tonight, the contract may unlikely to hold firm above 15,000 yuan/mt given heavy pressure from the 10- and 20- day moving averages. 

Tin: The most-traded SHFE 2006 contract rallied after exiting longs drove it to a low of 134,910 yuan/mt, and closed 0.59% higher on the day at 135,560 yuan/mt, extending the slight increases during the previous two days. Resistance is seen from 136,800 yuan/mt tonight.