SMM Evening Comments (May 23)

Telah Terbit: May 23, 2018 17:58
SMM Evening Comments

SHANGHAI, May 23 (SMM) – Most nonferrous metals traded weakly, rangebound on Wednesday May 23. SHFE tin recovered slightly from its poor performance last week and gained 0.8%. SHFE copper saw a smaller increase, and closer higher than yesterday. SHFE zinc dropped close to 1%, aluminium slid 0.8%, nickel lost 0.6% and lead dipped.

The ferrous complex fell across the board with coking coal down 4.6% and coke down 4.3%. Rebar and hot-rolled coil dropped over 1%. Iron ore lost 0.7% though it rebounded slightly.

Copper: The SHFE 1807 contract tumbled to a session-low of 51,620 yuan/mt during the day after it fell to a low of 51,760 yuan/mt. It recovered some losses as shorts exited the market before closure. Technically, SHFE copper stood above the 60-day moving average with strong support. We expect it to continue its rangebound pattern tonight with slightly higher trading levels.

Aluminium: As shorts closed their positions, the SHFE 1807 contract rebounded to a high of 14,640 yuan/mt from a low of 14,580 yuan/mt in the morning. As both shorts and longs closed out their positions, the trading level of the contract dipped and touched a low of 14,590 yuan/mt in the afternoon. Though open interest shrank 11,698 lots during the day, the contract remained rangebound, without clear direction. Investors were keen to exit the market. Market participants should monitor the 14,580 yuan/mt level.

Zinc: Shorts and longs cut their positions during the day. As several longs entered the market at relatively low prices, trading levels of the SHFE 1807 contract nudged up and hovered around the 23,620 yuan/mt level with a range of about 50 yuan/mt. As LME zinc fell to test the support at the $3,000/mt level during the European trading hours, we expect SHFE zinc to break support at the 23,500 yuan/mt level tonight.

Nickel: The SHFE 1807 contract regained some losses after it dipped to a low of 107,500 yuan/mt with pressure from shorts. It closed at 108,440 yuan/mt, down 650 yuan/mt from Tuesday. As KDJ indicators barely diverged from one another and as the longer-term moving average of the MACD shortened, the contract is expected to trade rangebound with downward room tonight. Investors will take cues from the May data of the Markit manufacturing purchasing managers’ indices (PMI) for the US and the eurozone, the US' weekly mortgage applications, new home sales in April, and the weekly crude oil inventory by the Energy Information Administration (EIA).

Tin: As investors added their longs, the SHFE 1809 contract climbed to a high of 147,290 yuan/mt. It rose above all moving averages today and is likely to gain further tonight. Pressure is expected at 148,000 yuan/mt from above.

Lead: The SHFE 1807 contract dropped to a low of 19,520 yuan/mt in the morning as some longs took profits and closed out their positions. The contract rebounded to a high of 19,895 yuan/mt in the afternoon as some longs entered the market. Although the SHFE lead contract with the most open interest declined today after 13 consecutive days of gains, the upward trend for the contract is likely to remain unchanged. We expect it to dip in the short term. Market participants should monitor the positions of shorts and longs.

 


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SMM Evening Comments (May 23) - Shanghai Metals Market (SMM)