SMM Evening Comments (Nov 22)

SHANGHAI, Nov 22 (SMM) – SHFE nonferrous metals ended mixed on Thursday. Nickel slumped 2.14%, tin dropped 1.2% and zinc lost 0.45% while copper gained 0.36%, aluminium increased by 0.73% and lead rose 0.74%.

The ferrous complex traded higher across the board. Iron ore jumped 1.37%, rebar advanced 1.28%, coking coal gained 0.89%, hot-rolled coil went up 0.79% and coke climbed 0.67%.

Copper: While the SHFE 1901 contract relinquished some gains as longs took profits after the contract climbed to the day’s highs of 49,710 yuan/mt, it went up from yesterday’s close, ending at 49,570 yuan/mt. The contract is likely to try to hold on to the five-day moving average at 49,584 yuan/mt tonight.

Aluminium: The SHFE 1901 contract extended overnight gains to close at 13,805 yuan/mt on the market talk of winter production curbs of about 10% in Liaocheng of Shandong province. Social inventories of primary aluminium saw a smaller decline this week and traded prices of alumina in Shanxi fell. Aluminium prices are likely to remain weak amid weakening consumption and falling costs. We expect the SHFE 1901 contract to weaken to test support at the five-day moving average tonight with a trading range of 13,750-13,850 yuan/mt.

Zinc: A decline in late trading hours sent the SHFE 1901 contract to close in negative territory, at 21,025 yuan/mt, after the contract rebounded from earlier lows. Resistance was at the 20-day moving average while support was at the 60-day moving average. A jump in its LME counterpart in European trade eased risk aversion sentiment among investors. Market participants tonight should monitor whether the SHFE 1901 contract can climb to the 20-day moving average.

Nickel: The SHFE 1901 contract extended overnight losses during the day and closed at 90,360 yuan/mt. KDJ lines diverged and expanded downwards with an extended MACD green bar. Market participants should monitor whether the contract can hold on to the 90,000 yuan/mt level tonight.

Lead: Tracking losses in SHFE zinc in late trading, the SHFE 1901 lead contract weakened to close at 18,345 yuan/mt after climbing to the day’s highs of 18,385 yuan/mt. The contract was up from yesterday’s close and overnight’s open with moving averages pointing towards bullish signals. This grew confidence among longs. The contract is expected to test pressure at 18,400 yuan/mt tonight with support at the 10-day moving average.

Tin: As longs cut their bets, the SHFE 1901 contract extended overnight losses in earlier morning trade before it consolidated to end the trading day at 148,860 yuan/mt. The contract has dropped past the 20-day moving average with the potential for further losses in the short term. Support is seen at 147,000 yuan/mt.