SMM Evening Comments (May 17)

Published: May 17, 2018 19:23
SMM Evening Comments

SHANGHAI, May 17 (SMM) – The nonferrous complex closed higher except for SHFE zinc that dropped close to 1%. SHFE aluminium rose close to 1%, copper, lead, nickel and tin inched up.

The ferrous complex saw mixed trading. Coking coal lost 1.9% while coke and iron ore closed slightly lower. Hot-rolled coil gained over 1% and rebar edged up.

Copper: The SHFE 1807 contract was dragged down by its LME counterpart after it surged to a high of 51,270 yuan/mt as investors cut their shorts. The SHFE copper index saw a decline of 6,198 lots to 708,000 lots in open interests. This marked the sixth consecutive trading day of decline. Technically, the contract stood below all moving averages. We expect it to trade rangebound with upward room tonight. Investors will take guidance from prices of LME copper tonight.

Aluminium: The SHFE 1807 contract climbed to a high of 14,925 yuan/mt as longs actively entered the market. The contract then fell and found support at the 14,865 yuan/mt level as longs took profits and left. Market participants should monitor spot discounts and alumina prices. We expect aluminium prices to continue their strong and rangebound pattern.

Zinc: As longs added their positions, the SHFE 1807 contract rose to a high of 23,930 yuan/mt. It lost all gains as longs closed out their positions and left the market. Limited upward momentum in SHFE zinc’s triggered bearish sentiment. There is a lack of clear directions due to production cuts for maintenance across smelters, as well as the inflows of imported zinc. We do not expect SHFE zinc to break support at the 23,500 yuan/mt level tonight as it did not fall below previous low levels today.

Nickel: The SHFE 1807 contract came off from a high of 108,440 yuan/mt and consolidated around the daily moving average in the morning. The contract fell but rebounded with support from the five-day moving average in the afternoon. It closed below the daily moving average. We expect it to trade weakly, rangebound tonight with pressure from the strong US dollar.

Lead: The SHFE 1806 contract traded rangebound under the daily moving average after it touched a low of 18,350 yuan/mt during the day. With much pressure, the contract consolidated at high levels for three days. We expect it to continue to consolidate tonight.

Tin: The SHFE 1809 contract surged above the 146,000 yuan/mt level and remained rangebound at high levels with a high of 146,250 yuan/mt during the day. We expect it to continue its rangebound pattern in the short term with support at the 145,000 yuan/mt level.

 


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