SMM Evening Comments (Dec 5)

SHANGHAI, Dec 5 (SMM) – SHFE nonferrous metals closed mostly higher on Thursday. Zinc led the increase and ended up 1.27%. Copper advanced 0.47%, lead rose 0.27%, tin grew 0.07%, while aluminium lost 0.14%, and nickel shed 1.3%. 

The ferrous complex traded on a mixed note as iron ore rose 0.98%, hot-rolled coil grew 0.67%, while rebar went down 0.64%, stainless steel fell 0.39%, and coke closed down 0.16%. 

Copper: The most-active SHFE 2001 contract pared some overnight gains as optimism waned around a near-term preliminary trade deal between Washington and Beijing and disappointing US service sector data reinforced worries about the global economic slowdown. The contract stabilised at around 47,150 yuan/mt and finished the trading day 0.47% higher at 47,200 yuan/mt. Technical indicators suggest limited upward momentum tonight. The contract may test support from 47,200 yuan/mt tonight. 

Aluminium: A smaller weekly decline in social inventories of primary aluminium grew concerns about weaker demand and prompted investors to cover their long position, which sent the most-liquid SHFE contract to an intraday low of 13,910 yuan/mt. However, the decline was capped as bearish position also departed at the 13,920 yuan/mt level, ending the contract at 13,930 yuan/mt, down 0.14% on the day. Near-term trading range is expected at 13,900-14,000 yuan/mt. 

Zinc: The most-traded SHFE 2001 contract shruggged off pressure from the five- and 10- day moving averages to an intraday high of 18,060 yuan/mt, and closed higher for the third straight session at 18,000 yuan/mt, up 1.27% on the day. The contract has returned close to the Bollinger middle band. Optimistic signals from technical indicators, together with better-than-expected spot trades, will likely see the contract testing pressure from 18,000 yuan/mt tonight. 

Nickel: The most-liquid SHFE 2002 contract stayed rangebound at the daily moving average, or the 104,200 yuan/mt level, before ended down 1.3% on the day at 103,940 yuan/mt. The contract has declined for six consecutive days. It is seen consolidating around 104,000 yuan/mt tonight. 

Lead: The most-traded SHFE 2001 contract stemmed its four straight sessions of decline, closing up 0.27% on the day at 15,060 yuan/mt. However, technical indicators remained bearish and may expand the downside room in the contract tonight. 

Tin: The most-liquid SHFE 2001 contract rebounded after departing longs drove it to an intraday low of 138150 yuan/mt, closing 0.07% higher on the day at 139,080 yuan/mt. Open interest shrank 994 lots to 22,574 lots, as investors cut both long and short position. The contract is expected to trade with support from 138,000 yuan/mt and resistance from 139,500 yuan/mt tonight.