SMM Evening Comments (Nov 27)

SHANGHAI, Nov 27 (SMM) – SHFE nonferrous metals traded lower across the board on Tuesday with zinc being the biggest loser, down 2.4% on the day. Lead dropped 1.7%, copper slid close to 0.8%, nickel fell over 0.5%, tin slipped 0.3% and aluminium dipped some 0.2%.

The ferrous complex, except for coking coal, was also broadly lower. Iron ore slumped over 3.7%, coke sank some 2.7%, hot-rolled coil slid close to 1% and rebar edged down 0.2%.

Copper: The SHFE 1901 contract fell to close at 48,880 yuan/mt, keeping some distance with the moving averages and nearing the lower Bollinger band. About 96.51 million yuan entered into the SHFE copper complex today, the most among nonferrous metals. Market participants should monitor whether the contract could hang on above the 48,810 yuan/mt level tonight.

Aluminium: The SHFE 1901 contract fell to the day’s lows of 13,740 yuan/mt as cautious longs covered their positions after the contract climbed to an intraday high of 13,810 yuan/mt in early morning trade. The contract then traded rangebound to finish at 13,760 yuan/mt. Recent supply cuts and the newly issued winter production curbs across Shandong’s Binzhou city are likely to provide a lift to aluminium prices in the short term, but we see limited upside room as the impact from Binzhou’s winter curbs is expected to be limited.

Zinc: The SHFE 1901 contract extended overnight losses to close at 20,055 yuan/mt and posted a six-day losing streak. The contract fell below the lower Bollinger band with the five- and 60-day moving averages creating a death cross. Market participants should monitor whether the contract could hold on to current levels tonight.

Nickel: As shorts took profits, the SHFE 1901 contract clawed back some losses to close at 88,690 yuan/mt after plunging to an intraday low of 88,120 yuan/mt. KDJ lines converged with a shortened MACD green bar. We expect the contract to continue to hover at 88,000-90,000 yuan/mt tonight.

Lead: Tracking losses in zinc, the SHFE 1901 contract tumbled past the 40- and 60-day moving averages and the 18,000 yuan/mt level to an intraday low of 17,935 yuan/mt in late trading of the day. The contract closed at 17,945 yuan/mt and posted a two-day losing streak, standing between the middle and lower Bollinger bands. Market participants should monitor whether the contract could regain its ground at the 18,000 yuan/mt level tonight.

Tin: The SHFE 1901 contract reversed overnight gains to close at 144,570 yuan/mt. It is expected to remain rangebound in the short run with resistance at 147,000 yuan/mt and support at 143,500 yuan/mt.