SMM Evening Comments (Nov 28)

Published: Nov 28, 2018 17:02
SMM Evening Comments

SHANGHAI, Nov 28 (SMM) – SHFE nonferrous complex ended in mixed performance on Wednesday. Nickel gained 0.45% with copper up 0.43%, zinc up 0.35%, lead up 0.33%, while aluminium lost 0.65% and tin dropped 0.94%

The ferrous complex traded higher across the board. Coking coal jumped 1.7%, rebar climbed 1.5%, iron ore advanced 0.96%, hot-rolled coil rose 0.94% and coke gained 0.43%.

Copper: Riding on gains in its LME counterpart, the SHFE 1901 contract climbed into positive territory and closed at the day’s highs of 49,280 yuan/mt. This helped the contract recover overnight losses, triggered by the strengthened US dollar. Short-covering mainly accounted for the gains during the day and open interest for the contract shrank 10,052 lots to 159,892 lots. The contract faces the potential for coming off from the 49,000 yuan/mt level with pressure at several moving averages. The 1902 contract is likely to become the most liquid SHFE copper contract tonight.

Aluminium: The SHFE 1901 contract extended overnight losses to close at 13,675 yuan/mt. Shorts added over 6,000 lots in 20 minutes and this sent the contract to 13,615 yuan/mt, the lowest since mid-January 2017. The contract now stands below all moving averages with converging and downwards expanding KDJ lines. Shandong Binzhou’s winter production curbs issued earlier in the week failed to halt the downtrend in aluminium prices. We expect the contract to claw back some losses tonight but upside room would be very limited.

Zinc: Despite an initial slide, the SHFE 1901 contract climbed to close at 20,225 yuan/mt, with the day’s highs of 20,280 yuan/mt. The contract snapped a six-day losing streak and KDJ lines turned around. We see limited upward momentum in the contract as short-covering boosted today’s gains. The contract is likely to fall to test support at the lower Bollinger band tonight as its LME counterpart tumbled in European trade.

Nickel: The SHFE 1901 contract came off to the five-day moving average and closed at 89,560 yuan/mt as longs took profits after the contract climbed to the day’s highs of 90,270 yuan/mt. KDJ lines diverged and expanded upwards with a shortened MACD green bar. We expect the contract to continue to trade under pressure at the 90,000 yuan/mt level tonight.

Lead: Despite a dip to 17,925 yuan/mt at the start of morning trade, the SHFE 1901 contract rose during the day and closed at 18,150 yuan/mt, near the day’s highs of 18,175 yuan/mt. Gains on the day helped the contract recover the losses in the previous trading day and stand above the 18,000 yuan/mt level and the 40-day moving average. We expect the contract to test pressure at the 10-day moving average tonight, with support at the 40-day moving average.

Tin: The SHFE 1901 contract hovered in a range of 143,300-144,500 yua/mt during the day and ended at 144,000 yuan/mt. We expect the contract to trade rangebound at lows in the short term with resistance at 146,000 yuan/mt and support at 142,500 yuan/mt.

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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