SMM Evening Comments (Nov 8)

SHANGHAI, Nov 8 (SMM) – SHFE nonferrous metals finished the trading day in mixed performance on Thursday. Tin gained over 1%, aluminium and lead increased by some 0.5% while copper dipped 0.26%, nickel slid 0.6% and zinc lost close to 0.7%.

The ferrous complex also closed mixed with the best performance from iron ore, up 2.16% on the day. Rebar climbed close to 1.2%, coking coal nudged up 0.07% while hot-rolled coil edged down 0.03% and coke slipped 0.55%.

Copper: The SHFE 1901 contract fluctuated to post a four-day losing streak today. It stood firmly above the 40-day moving average even as it fell near the 10-day moving average. Market participants should monitor if the contract extends its decline to the 40-day moving average tonight.

Aluminium: As longs added and shorts cut their positions, the SHFE 1901 contract initially extended overnight gains. With pressure at 14,000 yuan/mt, the contract reversed its direction and lost some earlier gains to end at 13,945 yuan/mt. Its KDJ lines diverged and expanded upwards while the MACD green line shortened. The market received some support from the news that Brazil court upheld partial shutdown at Hydro Alunorte alumina refinery. But the contract appeared to run out of steam after hitting the 14,000 yuan/mt level. We expect the contract to test the 10-day moving average tonight.

Zinc: The SHFE 1901 contract fluctuated in negative territory today and closed at 20,780 yuan/mt. It fell below the 60-day moving average and the five-day moving average expanded downwards past the 40-day moving average, reflecting the recent weak performance in SHFE zinc. We expect limited downside room for SHFE zinc as social inventories did not expand significantly. The SHFE 1901 contract is likely to trade rangebound around the 60-day moving average tonight.

Nickel: An aggressive buildup of short positions dragged the SHFE 1901 contract to a low of 95,600 yuan/mt before it recovered all losses as shorts covered their positions. But the rebound failed to push the contract to close in the black today. The KDJ lines diverged and expanded upwards while the MACD green line shortened. Market participants should monitor if the contract stands firmly above the 96,000 yuan/mt level tonight.

Lead: As longs added and shorts cut their positions, the SHFE 1812 contract rebounded from a low of 18,355 yuan/mt to finish the trading day higher at 18,465 yuan/mt. The contract stemmed its four-day losing streak today but pressure remains at 18,500 yuan/mt. The contract is expected to test the pressure at the 10-day moving average tonight.

Tin: Short-covering boosted a sharp gain in the SHFE 1901 contract shortly after the opening bell. By closing, the contract extended its gains to end at 147,660 yuan/mt. Today, the contract shrugged off resistance at several moving averages, bolstered by tightening tin ore supplies. SHFE tin is likely to strengthen in the short run with resistance at 149,000 yuan/mt.