SMM Evening Comments (May 21)

SHANGHAI, May 21 (SMM) – Most SHFE nonferrous metals closed lower on Tuesday, with the biggest loss of 0.8% in zinc. Aluminium fell 0.3%, tin shed 0.2% and copper sank close to 0.1%, while lead gained 0.2% and nickel advanced 0.3%.

The ferrous complex continued their strong performance, and traded higher across the board. Coke increased by 5.2%, rebar climbed 3.8%, hot-rolled coil rose close to 3.2%, iron ore gained 1.3% and coking coal crept up 0.9%.

Copper: As longs added their positions, the most active SHFE July contract recovered from overnight losses to highs of 47,810 yuan/mt before it relinquished those gains to end 0.08% lower at 47,700 yuan/mt. The five- and 10-day moving averages crossed, resulting in resistance, and the US-China trade dispute continued to loom over the market. The market tonight is likely to continue to seek direction from its London counterpart, and the SHFE 1907 contract is expected to try to remain above the 47,700 yuan/mt level.

Aluminium: The most traded SHFE July contract recovered some ground to 14,280 yuan/mt before a loss of nearly 4,000 lots in long positions forced it to give up those gains to close at 14,250 yuan/mt, down 0.31% on the day. Norsk Hydro’s Monday announcement that it can resume full output at its Alunorte alumina refinery following a ruling by a Brazilian federal court accounted for the loss in prices. The contract is expected to extend its losses tonight and test the 10-day moving average.

Zinc: The most active SHFE July contract fluctuated during the day, and pared some overnight losses to finish the trading day 0.82% lower at 20,670 yuan/mt. Open interest for the 1906-07 contracts dropped more than 20,000 lots on the day. Downbeat fundamentals are likely to keep SHFE zinc weak tonight, with the contract hovering around the daily moving average.

Nickel: As longs aggressively loaded up their positions, the most active SHFE July contract climbed to an one-month high of 98,900 yuan/mt before profit-taking forced it to pull back to close 0.33% higher at 98,100 yuan/mt. Its KDJ lines expanded upwards, with an extended MACD red bar. The contract is expected to try to stand firmly above 98,000 yuan/mt tonight.

Lead: The July contract become the most traded SHFE lead contract today. As longs added and shorts trimmed their positions, the contract rebounded from earlier lows in afternoon trade, and closed the trading day 0.16% higher at 16,135 yuan/mt. With strong support from the 16,000 yuan/mt level, SHFE lead temporarily stemmed its declines, and the five- and 10-day moving average shaped a golden cross. If it does not pull back tonight, it is likely to continue its strong performance.

Tin: The most active SHFE September contract continued to trade rangebound at lows on the day. It closed 0.17% lower at 145,150 yuan/mt, as shorts added their positions. Support is seen at 145,000 yuan/mt, with next support at 144,000 yuan/mt.