SMM Evening Comments (Nov 21)

Published: Nov 21, 2018 17:31 (GMT+8)
SMM Evening Comments

SHANGHAI, Nov 21 (SMM) – SHFE nonferrous metals, except for lead, ended in negative territory across the board on Wednesday amid shaky investor confidence after steep losses on Wall Street overnight. Tin tumbled 1.9%, zinc dropped 1.5%, nickel slid 1.4%, copper slipped 0.8% and aluminium dipped 0.2%.

The ferrous complex ended mixed. Rebar slumping 2% and coke fell 1.6% while hot-rolled coil gained 0.6%, coking coal increased by 0.7% and iron ore jumped 1.3%.

Copper: While the SHFE 1901 contract inched up in a tight range to close at 49,410 yuan/mt during daytime trading hours, steep overnight losses forced it to post a two-day losing streak and lowered it to the middle Bollinger band at 49,572 yuan/mt, with its KDJ lines expanding downwards. Market participants tonight should monitor whether the contract can hang on above the 10-day moving average at 49,326 yuan/mt.

Aluminium: The SHFE 1901 contract reversed some overnight losses to end at 13,745 yuan/mt, still below the five-day moving average. The spread between the 1812 and 1901 contracts flipped into backwardation in anticipation of value-added tax cuts. Spot discounts did not narrow. Aluminium prices remained weak on expected declines in alumina prices and continued sluggish demand. We expect the 1901 contract to trade rangebound below moving averages tonight with a range of 13,650-13,750 yuan/mt.

Zinc: Bolstered by gains in its LME counterpart, the SHFE 1901 contract climbed in late trading hours to close at 21,140 yuan/mt, but overnight losses dragged the contract below the middle Bollinger band with the lows of the trading day below the 60-day moving average. The downward expanding KDJ lines suggested pressure over the contract. We expect the contract to remain weak tonight.

Nickel: After the plunge overnight, the SHFE 1901 contract traded rangebound during daytime trading hours and closed at 91,850 yuan/mt.Its  KDJ lines expanded downwards with an extended MACD green bar. Market participants tonight should monitor whether the contract can hold on to the 91,500 yuan/mt level.

Lead: The SHFE 1901 contract pared overnight losses to end at 18,290 yuan/mt. It is the only SHFE nonferrous metal who ended the trading day in the black on Wednesday. The contract now stands around the upper Bollinger band with support at the five-day moving average. We expect it to remain rangebound into near term and to test pressure at 18,400 yuan/mt tonight.

Tin: The SHFE 1901 contract moved within a tight range of 150,200-150,400 yuan/mt and closed at 150,480 yuan/mt after the slump overnight. Support remains at 150,000 yuan/mt on recent supply cuts.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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