SMM Evening Comments (Apr 16)

Published: Apr 16, 2018 18:14

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SMM Evening Comments

SHANGHAI, Apr 16 (SMM) – Nonferrous metals futures rose across the board on Monday April 16, as SHFE nickel led the gains with a rise of nearly 1.7%. Aluminium and zinc rose close to 1%, tin gained over 0.7% while lead and copper inched up.

Most ferrous metals closed lower except for coke. Iron ore dipped nearly 2.6%, coking coal dropped close to 2.5%, rebar fell almost 2%, and hot-rolled coil lost almost 1.7%.

Copper: The SHFE 1806 contract climbed to a high of 50,610 yuan/mt in the afternoon as investors added their longs. It regained losses overnight and closed at 50,490 yuan/mt. Technically, the contract faced resistance from several moving averages above without effective support during the day. It is expected to trade rangebound tonight. The SHFE 1804 contract was delivered today and closed at 50,380 yuan/mt with a larger price gap compared to the dominant 1806 contract. Its settlement price stood at 50,410 yuan/mt.

Aluminium: Driven by a stronger LME, the SHFE 1806 contract closed at a high of 14,625 yuan/mt today. Prices are unlikely to drop in the short term due to US sanctions. We expect the contract to continue to receive support from LME aluminium tonight.

Zinc: As shorts reduced their positions, SHFE zinc regained some losses. We expect it to continue to test the pressure at the lower band of the Bollingster line tonight. SHFE zinc may lose its gains as shorts add their positions. The 1804 contract was delivered during the day with a settlement price of 23,740 yuan/mt and delivery volume of 18,800 mt.

Nickel: As worries from macroeconomic factors eased, SHFE nickel rose above several moving averages during the day with a high at 104,670 yuan/mt. Technically, the KDJ indicator expanded upwards with capital inflows of 101 million yuan. The contract is likely to hover at high levels tonight. Tonight, investors should take more cues from the US retail sales data for March.

Tin: As shorts reduced their positions, SHFE tin climbed up in the afternoon and rebounded above the five- and 20-day moving averages. We expect it to test 144,500 yuan/mt tonight.

Lead: The SHFE 1805 contract rebounded after it touched a six-month record low of 18,035 yuan/mt today, on worries over the political turmoil during the weekend. Today, the main contract switched to the 1806 and moved to close at 18,100 yuan/mt with support from longs. We see it trading rangebound with pressure from several moving averages above. The 1804 contract was delivered today and gained support from the uptick in the main contact. It closed at 18,530 yuan/mt with a settlement price of 18,395 yuan/mt.

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