SMM Evening Comments (May 11): Shanghai base metals closed mixed, aluminium and tin gained more than 1%

SHANGHAI, May 11 (SMM) – SHFE nonferrous metals ended mixed on May 11, following after they opened higher for the most part on Monday amid prospects for higher demand as countries including Australia, France and Spain started to reopen economies. 

Shanghai copper extended its gains from the prior week and added 0.39% on Monday. Aluminium climbed 1.05%, tin increased 1.16%, while lead shed 0.18%, zinc eased 0.09% and nickel edged down 0.15%. 

The ferrous complex also traded in a mixed note. Iron ore slipped 0.32%, rebar went down 0.14%, coke fell 1.46%, while hot-rolled coil inched up and stainless steel advanced 3.95%. 

China’s central bank said on Sunday that it will step up counter-cyclical adjustments to support the economy and will roll out more flexible policies to fend off financial risks.

The SHFE will allow delivery of nickel briquettes against its futures contracts, starting from October 16, in response to rising demand for other forms of nickel, an essential raw material of stainless steel and electric vehicle batteries. 

Copper: The most-traded SHFE June contract rose to a session high of 43,950 yuan/mt as longs loaded up their positions. It erased gains in the afternoon session, finishing the day 0.39% higher at 43,500 yuan/mt. Technical support may expand the upside room of the contract, which is expected to test pressure from 44,000 yuan/mt. 

Aluminium: The most-liquid SHFE contract lost upward momentum after hitting an intraday high of 12,560 yuan/mt. It hovered around 12,535 yuan/mt before ending at that level, up 1.05% on the day. With the daily MACD red line shortening, the contract is likely to face heavy pressure from 12,700 yuan/mt. Social inventories of primary aluminium ingots in China continued to fall after the Labour Day holiday, as demand remained robust while arrivals were limited.

Zinc: The most-active SHFE contract relinquished gains from the previous week as loaded-up shorts sent it to an intraday low of 16,815 yuan/mt, settling it at 16,830 yuan/mt, down 0.09% on the day. China’s social inventories of zinc inched up 600 mt over weekend, and the slight increase suggests continued strength in consumption. The contract may see limited downsides given support from the raw materials front.

Nickel: The most-traded SHFE July contract gave up gains after it advanced to an intraday high of 103,450 yuan/mt. It ended 0.15% lower on the day at 101,610 yuan/mt, trimming gains from the previous week but staying above all moving averages. Bullish signals from the technical indicators and a rally in stainless steel futures may continue to support Shanghai nickel, which may test pressure from 103,500 yuan/mt. 

Lead: The most-active SHFE contract failed to break up pressure from the 60-day moving average as it followed its LME counterpart higher, ending 0.18% lower on the day at 13,895 yuan/mt. With the commissioning of new capacity, continued slide in domestic lead inventories and elevated prices of battery scrap, lead futures will remain rangebound with little downsides or upsides. 

Tin: The most-liquid SHFE July contract received a boost from rising longs, as it climbed to a session high of 131,640 yuan/mt and ended the day 1.16% higher at 131,130 yuan/mt. Pressure above is seen from 132,000 yuan/mt.