SMM Evening Comments (Apr 18)

SHANGHAI, Apr 18 (SMM) – Nonferrous metals rebounded across the board on Wednesday April 18, except for lead. SHFE zinc, tin and nickel rose close to 1%, copper gained 0.63%, and aluminium edged up slightly.

The ferrous complex remained strong. Coke surged close to 5%, coking coal jumped 3%, hot-rolled coil and iron ore gained over 2% and rebar rose close to 2%.

Copper: SHFE copper broke the 51,000 yuan/mt level following the cut in reserve requirement ratios (RRRs). Technically, it stood above the 20-day moving average as the KDJ expanded upwards. We expect it to stand at the 51,000 yuan/mt level and test 51,500 yuan/mt tonight.

Aluminium: As LME aluminium performed strongly in the afternoon, SHFE aluminium received a boost and climbed up from a low of 14,825 yuan/mt. The SHFE/LME ratio tumbled to a new low of 6.16 and we see it likely to break six soon. We expect SHFE aluminium to remain strong in the short term and to stand firmly at the 15,000 yuan/mt level.

Zinc: As investors covered their shorts in the afternoon, the SHFE 1806 contract rose to test 24,000 yuan/mt. Tight supplies and steady consumption kept spot premiums at high levels. The contract is likely to try to stand above 24,000 yuan/mt again tonight.

Nickel: LME nickel surged close to 4% in the afternoon due to a steady decline in LME inventory and concerns of a US sanction on Russian nickel. This marked a record high since February 2015. SHFE nickel gained support from the stronger LME nickel and hit a high of 105,200 yuan/mt today. It is likely to trade robustly tonight. Investors will take more cues tonight from the US weekly mortgage applications from the Mortgage Bankers Association and its weekly crude oil inventories from the Energy Information Administration.

Tin: The SHFE 1805 contract rose to a high of 145,870 yuan/mt near closing today, buoyed by optimistic sentiment as China’s central bank cut RRRs by 100 basis points overnight. This freed up lending for small firms and eased financial pressure in the mid- to long-term. We see the contract remaining strong in the short run with a target above 146,000 yuan/mt.

Lead: SHFE lead fell to a low of 18,020 yuan/mt in the morning. It rebounded in the afternoon with strong performance across the nonferrous complex. SHFE lead closed slightly lower and performed relatively weakly among nonferrous metals. We see strong upward pressure given the moving averages overhead, and expect it to stay rangebound tonight.

For editorial queries, please contact Daisy Tseng at daisy@smm.cn 
For more information on how to access our research reports, please email service.en@smm.cn