SMM Evening Comments (May 14)

Published: May 14, 2018 17:49

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SMM Evening Comments

SHANGHAI, May 14 (SMM) – Most nonferrous metals rose and closed higher on Monday May 14. SHFE nickel surged 2.4%, lead gained 1.3% and tin and copper inched up. SHFE aluminium and zinc edged down.

The ferrous complex rose across the board with coke leading the gains with an increase of 2.3%. Iron ore jumped 2.2%, coking coal rose 0.7% with rebar and hot-rolled coil inched up.

Copper: As longs entered the market, the SHFE 1807 contract hit a high of 51,760 yuan/mt. With resistance at the 60-day moving average, the contract fell and traded rangebound along the 51,580 yuan/mt level while longs exited the market. It came off from highs during the day with its trading level up slightly. We expect it to trade rangebound tonight.

Aluminium: The SHFE 1807 contract touched a low of 14,625 yuan/mt with its trading level slightly down. Open interest of SHFE aluminium shrank 12,636 lots to 720,754 lots, a new low since August 2017. Trading volumes for the index also declined 74,824 lots to 262,000 lots, a new low since July 2017. Funds continued to flow out of the market. We expect aluminium prices to consolidate and trade rangebound in the short term, with a lack of clear directions.

Zinc: The SHFE 1807 contract initially fell to a low of 23,515 yuan/mt as shorts significantly added their positions. It then pared down some losses with support from longs. The contract continued performing poorly in the afternoon as shorts continued to add their positions. SHFE zinc broke through the support from all the moving averages during the day. As imported materials entered the spot market, market participants should watch out for shorts. We expect support from the 23,500 yuan/mt level tonight.

Nickel: As longs added their positions, the SHFE 1807 contract climbed up to a high of 106,740 yuan/mt.Trading levels moved around the 106,500 yuan/mt level. SHFE nickel rose during the day with support from several moving averages. We expect it to continue its strong, rangebound pattern tonight.

Lead: The SHFE 1806 contract surged to a high of 19,185 yuan/mt in the morning with the support from longs. It then came off from highs in the afternoon as longs took their profits and left the market. Major market participants were keen to sell at highs. We will monitor support at the five-day moving average as well as positions of the longs in the short term. We expect the contract to weaken tonight.

Tin: The SHFE 1809 continued its rangebound trading pattern for the most of today, between 145,700-146,100 yuan/mt. Longs were keen to enter the market at low levels. SHFE tin stood above the five-day moving average. We expect it to trade rangebound in the short term with support at 144,500 yuan/mt and resistance at 146,700 yuan/mt.

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Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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