SMM Evening Comments (Apr 3)

SHANGHAI, Apr 3 (SMM) – SHFE nonferrous metals and ferrous complex rose across the board on Wednesday April 3, driven by US-China trade hopes and upbeat data in the Chinese service sector. Nickel climbed 1.46%, copper advanced 0.51%, tin grew 0.34%, lead increased 0.27%, zinc jumped 0.2%, and aluminium went up 0.15%.

Iron ore closed 5.34% higher, rebar and hot-rolled coil rose over 1%, coke gained 0.67%, and coking coal increased 0.56%.

Copper: The most-traded SHFE May contract extended its increase from the morning as longs entered in the afternoon and bolstered it to a high of 49,520 yuan/mt near closing. This came after a higher LME copper lifted its SHFE counterpart to around 49,210 yuan/mt in early trades. The SHFE 1905 contract ended 0.51% higher on the day at 49,510 yuan/mt, with open interests up 2,064 lots to 181,000 lots. Further upward momentum is likely to see the contract testing pressure from 49,600 yuan/mt tonight. 

Aluminium: A buildup of longs and exiting shorts stemmed decline in the SHFE most-liquid May contract, which rose to a high of 13,820 yuan/mt before settled at 13,800 yuan/mt. Open interests accumulated by 1,866 lots to 684,000 lots. On Thursday April 4, SMM will release its weekly survey results for the social inventories of primary aluminium. 

Zinc: A robust LME zinc bolstered the most-active SHFE May contract to an intraday high of 22,965 yuan/mt near closing, after pressure from the daily moving average depressed the contract to a low of 22,570 yuan/mt before noon. It ended at 22,905 yuan/mt, with open interests down 10,928 lots to 250,000 lots. We expect its LME counterpart to keep the 1905 contract firm at the Bollinger upper band tonight.

Nickel: While the SHFE May contract failed to break pressure from 103,000 yuan/mt in the morning, a lower US dollar and improved macroeconomics sentiment pulled it to a high of 103,940 yuan/mt, before ended it at 103,770 yuan/mt. Resistance from 104,000 yuan/mt remained. Some 170 million yuan of capitals flew into all SHFE nickel contracts today, topping the base metals. As the KDJ indicators expanded upwards, the 1905 contract may test support at current levels tonight. 

Lead: As base metals strengthened across the board, the SHFE May contract climbed above the five- and 10- day moving averages, and closed 0.27% higher on the day at 16,890 yuan/mt. However, pressure from shorts may cap any upward momentum in the contract tonight. Trading range is set at 16,700-16,950 yuan/mt tonight. 

Tin: With support from the five- and 60- day moving averages, the SHFE May contract traded around the 40-day moving average with the highest at 149,190 yuan/mt near closing. Open interests continued to shrink, by 468 lots, and this settled the contract at 148,870 yuan/mt. Tonight, it may attempt to stand firm above the 40-day moving average.