SMM Evening Comments (Nov 16)

SHANGHAI, Nov 16 (SMM) – SHFE nonferrous complex ended in mixed territory with zinc as the best performer, up close to 2.7% on the day. Copper climbed close to 0.8%, aluminium gained 0.07%, tin nudged up 0.01% while nickel and lead lost some 0.3%.

The ferrous complex, except for rebar, ended in the black across the board. Coke jumped more than 2.4%, iron ore rose by over 2%, coking coal increased by close to 1.8% and hot-rolled coil advanced close to 0.6%.

Copper: The SHFE 1901 contract held on to overnight gains during the day and closed at 49,580 yuan/mt. The day’s highs stood between the middle and upper Bollinger bands. Its KDJ lines diverged and expanded upwards with a shorter MACD green bar. Open interest for the contract shrank 3,716 lots to 189,794 lots. The contract is expected to extend its gains to 49,000 yuan/mt tonight.

Aluminium: As shorts aggressively added their bets with open interest up over 2,000 lots in five minutes, the SHFE 1901 contract plunged to a three-day low of 13,695 yuan/mt. The contract then recovered those losses to close in the black at 13,760 yuan/mt. SHFE aluminium weakened this week despite output cuts at primary aluminium producers and the start of winter production curbs across various regions. We do not expect the contract to rebound significantly tonight.

Zinc: The SHFE 1901 contract extended overnight gains to close at 21,515 yuan/mt today. It shrugged off resistance at the middle Bollinger band and stood firmly above the 20-day moving average. The latest SMM data showed that social inventories of refined zinc across Shanghai, Guangdong and Tianjin remained at low levels. We expect the SHFE 1901 contract to consolidate around the middle Bollinger band tonight.

Nickel: As shorts added their positions, the SHFE 1901 contract relinquished all overnight gains before it inched up to close at 94,080 yuan/mt. Its KDJ lines diverged and expanded downwards with a shortened MACD green bar. Market participants should monitor whether the contract can hold on to the 94,000 yuan/mt level tonight.

Lead: The SHFE 1901 contract returned to negative territory, ending at 18,140 yuan/mt, as some short-term longs took profits after the contract recovered earlier losses to 18,235 yuan/mt. The uptrend in SHFE lead stalled, with the moving average holding steady and support remaining at 18,000 yuan/mt. We expect the SHFE 1901 contract to test pressure at the upper Bollinger band as high as 18,306 yuan/mt tonight.

Tin: The SHFE 1901 contract fell to close at 153,220 yuan/mt as some longs took profits after the contract jumped to the day's high of 154,670 yuan/mt. The contract is expected to trade rangebound in the short term, with support at 150,000 yuan/mt, after consecutive gains.