SMM Evening Comments (May 21)

SHANGHAI, May 21 (SMM) – China’s nonferrous metals futures closed higher except for aluminium and nickel on Monday May 21. Lead led the gains with a rise of over 1.4%, zinc grew nearly 1.1%, tin rose almost 0.8%, and copper inched up.

Ferrous metals dropped across the board with iron ore leading the loss and closing 3% lower. Coke fell nearly 2%, hot-rolled coil and rebar lost over 1.8% while coking coal dipped. 

Copper: The SHFE 1807 contract jumped above the daily moving average today and recovered the loss of last Friday with support from longs as the US put its trade war with China on hold. However, the contract faced pressure at 51,500 yuan/mt due to a stronger US dollar. It is likely to test resistance at this level tonight. 

Aluminium: The SHFE 1807 contract rose to a high of 14,860 yuan/mt as domestic inventory dip steadily. However, as both long and short positions were reduced, the contract is expected to trade rangebound tonight. 

Zinc: The SHFE 1807 contract broke its rangebound pattern today as it climbed and touched the 40-day moving average. It rose to a high of 24,080 yuan/mt with open interests growing 7,854 lots to 250,000 lots. As most domestic zinc smelters in north China undergo maintenance in recent weeks, the contract is likely to hover at highs and test resistance at 24,000 yuan/mt tonight. 

Nickel: Shorts cutting positions in the morning drove the SHFE 1807 contract up to a high of 109,420 yuan/mt. It then fell to a low of 108,300 yuan/mt as the other side of the market also cut their exposure. It found some support at the 10-day moving average and traded rangebound at 108,500-109,100 yuan/mt. We expect it to continue its rangebound pattern tonight.

Tin: The SHFE 1809 contract rose back to the five- and 10-day moving averages and hit a high of 146,250 yuan/mt today as investors cut their short positions. It is set to test pressure at 147,000 yuan/mt tonight. 

Lead: With support from longs, the SHFE 1806 contract climbed up twice to 19,770 yuan/mt and 19,840 yuan/mt during the day amid optimistic sentiment in the market. The dominant contract moved to 1807 today, which also soared to close at 19,310 yuan/mt, 260 yuan/mt higher from the previous day. The 1807 contract is expected to gain further tonight buoyed by longs. 

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