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SMM Evening Comments (Nov 12)
Nov 12,2018 18:24CST
price review forecast
SMM Evening Comments

SHANGHAI, Nov 12 (SMM) – SHFE base metals ended the trading day in mixed performance with tin as the best performer, up 2% on the day. Zinc gained 0.36% while lead dipped close to 0.3%, aluminium edged down 0.4%, copper fell by more than 0.7% and nickel slumped close to 2.4%.

The ferrous complex, except for coking coal, ended in negative territory across the board. Rebar plunged 3%, coke tumbled over 2.7%, hot-rolled coil slid more than 1.9% and iron ore slipped close to 0.8%.

Copper: The SHFE 1901 contract edged down in a tight range to close at 48,920 yuan/mt on Monday and posted a six-day losing streak. It now stands below all moving averages with support at the lower Bollinger band. Its KDJ lines diverged and expanded downwards with an extended MACD green line. Market participants tonight should monitor whether the contract extends its decline to 48,800 yuan/mt, the level seen at the start of the month.   

Aluminium: Short-covering boosted the SHFE 1901 contract to an intraday high of 13,920 yuan/mt from an intraday low of 13,820 yuan/mt. Open interest for the contract shrank by over 1,500 lots in 30 minutes. The contract then came off from the intraday high to close at 13,860 yuan/mt, lower than at closing on Friday. It is likely to remain weak tonight.

Zinc: While the SHFE 1901 contract ended in the black, it reversed earlier gains during the day and closed lower than the opening price on Friday night. SMM data showed that social stocks across Shanghai, Tianjin and Guangdong inched by 2,000 mt over the weekend, which slightly jeopardised confidence among longs. The contract is likely to weaken tonight given losses in its LME counterpart and strong resistance created by the crossed 10- and 40-day moving averages.

Nickel: As shorts added their positions, the SHFE 1901 contract initially fell to a new low in close to one year at 94,080 yuan/mt. Shorts then took profits and covered their positions, and this helped the contract to recover those losses. The contract then traded between 95,000 yuan/mt and 94,500 yuan/mt to finish the trading day at 94,650 yuan/mt. Its KDJ lines diverged and expanded downwards with an extended MACD green line. Market participants should monitor if the SHFE 1901 contract stands firmly above 94,000 yuan/mt and test 95,000 yuan/mt tonight.

Lead: As longs added their positions, the SHFE 1812 contract climbed from earlier lows. While the dip by closing kept the contract from ending in positive territory, the contract has closed higher than opening prices for three consecutive days with support at the five-day moving average. We expect it to rise further to test pressure at 18,750 yuan/mt tonight.

Tin: As longs added their positions, the SHFE 1901 contract surged to close near the day’s highs of 151,740 yuan/mt today after a brief reprieve at 149,200 yuan/mt on Friday night. This helped the contract record a five-day winning streak and to exceed 150,000 yuan/mt to test resistance at 152,000 yuan/mt. The contract is expected to remain strong in the short run as most domestic smelters hold back from offloading cargoes. Resistance is seen at 157,000 yuan/mt.

Evening comments

For queries, please contact Frank LIU at liuxiaolei@smm.cn

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