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SMM Evening Comments (Apr 19)
Apr 19,2018 18:28CST
SMM Comments
SMM Evening Comments

SHANGHAI, Apr 19 (SMM) – Nonferrous metals futures carried over their strong performance today, with SHFE nickel surging over 4% and aluminium jumping over 3%. Zinc gained close to 3%, copper rose over 2%, lead went up over 1%, and tin inched up slightly.

The ferrous complex also rose across the board. Iron ore led a gain of 6.5%, coke surged over 3%, coking coal rose 2.5%, with rebar up 2% and hot-rolled coil up over 1%.

Copper: As the trade tension eased, SHFE copper jumped amid the strong performance of the nonferrous complex while shorts significantly reduced their positions. Technically, it stood above the 40-day moving average with strong pressure at the 60-day moving average. The KDJ indicator expanded upwards. However, as market participants turn cautious due to uncertain macroeconomic factors, we expect the contract to stay rangebound in the short term above the 51,500 yuan/mt level.

Aluminium: The SHFE 1806 contract surged to a high at 15,565 yuan/mt in the afternoon as uncertainties emerged over refined aluminium export tariff. This marked the highest level since November 2017 and prices are likely to stay robust tonight. Investors will continue to look for cues from the US sanctions against Russia and China's customs policy.

Nickel: As LME nickel continued to surge and recorded a new high since December 2014, SHFE nickel was driven up to a high of 108,770 yuan/mt. We expect SHFE nickel to remain rangebound at highs tonight. US initial claims for unemployment benefits over the week ended on April 14 to be released tonight would give more cues to market.

Zinc: The SHFE zinc 1806 contract rose to a high at 24,600 yuan/mt in the afternoon with shorts cutting their positions. While most investors took a watch-and-wait stance, the contract is likely to trade rangebound with the lead of other stronger base metals tonight.

Tin: The SHFE 1805 contract fell from highs and mostly traded rangebound during the day. While base metals rose across the board, SHFE tin gained at the slowest rate with pressure at the 60-day moving average. We see it testing the resistance level tonight.

Lead: Buoyed by the rising base metals, the SHFE 1806 lead contract hovered at the day moving average with a range of 50 yuan/mt today. In the near term, it is likely to rise further if support is seen by strong SHFE nickel and aluminium. Otherwise, the contract may fall from highs with pressure from shorts.


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