SMM Evening Comments (Nov 29)

SHANGHAI, Nov 29 (SMM) – SHFE nonferrous metals ended in mixed territory on Thursday. Copper jumped 1.3%, zinc grew 0.9%, lead advanced 0.7%, nickel gained 0.54% while tin lost 0.13% and aluminium slid 0.26%.

The ferrous complex, except for rebar, traded higher across the board. Coking coal went up 1.36%, iron ore climbed 1.28%, hot-rolled coil rose 0.64% and coke increased by 0.38%.

Copper: Riding on gains in its LME counterpart, the SHFE 1902 contract saw a higher open this morning. The contract pared those gains during the day, ending at 49,500 yuan/mt, but held on to overnight gains. The contract rose for a second straight day and approached the middle Bollinger band. KDJ lines converged with a shortened MACD green bar. Market participants should monitor whether the contract can stand above the middle Bollinger band tonight.

Aluminium: The SHFE 1901 contract reversed overnight gains and fell into the red to close at 13,650 yuan/mt, posting a three-day losing streak. Its KDJ lines expanded downwards. Without positive news on the fundamentals front, aluminium prices remained weak and the contract is unlikely to rebound substantially tonight.  

Zinc: As short-term longs took profits on overnight gains, the SHFE 1901 contract fell earlier in the day. It touched a low of 20,140 yuan/mt as shorts added their bets. The contract clawed back some losses and closed at 20,275 yuan/mt as shorts covered their positions. Open interest for the 1901 contract shrank 9,224 lots on the day while the 1902 and 1903 contracts saw a combined gain of over 26,000 lots. The 1901 contract posted a two-day winning streak with the day’s highs hitting the five-day moving average. The increase in its LME counterpart in European trade is expected to buoy the SHFE 1901 contract tonight, testing the resistance at the five-day moving average again.

Nickel: With aggressive sell-off by longs, the SHFE 1901 contract plummeted to an intraday low of 89,050 yuan/mt after trading on the exchange recovered from the system breakdown. The contract recovered those losses and closed at 89,920 yuan/mt as shorts cut their positions. We expect the contract to continue to trade under pressure at the 90,000 yuan/mt level tonight.

Lead: The SHFE 1901 contract relinquished some overnight gains and closed at 18,190 yuan/mt. It now stands between the middle and upper Bollinger bands and an upward track looms. We expect the contract to continue its rangebound pattern tonight with support at the 20-day moving average.

Tin: A decline into negative territory at the beginning of morning trade sent the SHFE 1901 contract to hover around 143,700 yuan/mt during the day, ending at 143,680 yuan/mt. We expect the contract to continue to trade under pressure in the short term with resistance at 144,700 yuan/mt and support at 142,500 yuan/mt.