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SMM Evening Comments (Nov 30)
Nov 30,2018 18:03CST
price review forecast
SMM Evening Comments

SHANGHAI, Nov 30 (SMM) – SHFE nonferrous metals ended in mixed territory on Thursday with zinc as the best performer, up over 2% on the day. Nickel jumped 1.9%, copper rose 0.42% and lead gained 0.33% while tin lost 0.22% and aluminium fell 0.8%.

The ferrous complex also closed mixed. Rebar declined 0.83%, coking coal slid 0.3% while hot-rolled coil increased by 0.35%, coke climbed 0.66% and iron ore grew 1.7%.

Copper: The SHFE 1901 contract inched up during the day and closed at 49,650 yuan/mt, posting a three-day winning streak. This helped the contract stand above the 60-, 20-, 10- and five-day moving averages. Sitting between the middle and upper Bollinger bands, the contract saw its KDJ lines diverge and expand upwards and a red MACD bar loom. Open interest for the contract grew 6,312 lots to 171,166 lots. Market participants tonight should monitor whether the contract could regain the ground at the 40-day moving average as high as 49,609 yuan/mt.

Aluminium: The SHFE 1901 contract fell to close at 13,555 yuan/mt, near the day’s lows of 13,535 yuan/mt. The contract has closed lower for four consecutive days and this sent it below the five-day moving average. Open interest for the contract grew 8,384 lots to 238,006 lots. We do not expect the contract to see a substantial rally tonight, given weak fundamentals.

Zinc: Short-covering helped the SHFE 1902 contract shrug off resistance at the five-day moving average during the day, ending at 20,325 yuan/mt. The contract extended overnight gains and posted a substantial one-day growth. Social inventories of refined zinc across Shanghai, Tianjin and Guangdong decreased by 15,300 mt from a week ago to stand at 111,000 mt as of Friday November 30, SMM data showed. This provided some support to zinc prices. We expect the contract to try to stand firmly above the five-day moving average tonight.

Nickel: The SHFE 1901 contract extended overnight gains to close at 91,330 yuan/mt. Open interest for the contract shrank 10,824 lots to 245,900 lots. The contract is expected to hover around the 91,000 yuan/mt level tonight.

Lead: Gains in SHFE zinc bolstered the SHFE 1901 contract to recover earlier losses to 18,265 yuan/mt. In late trading hours of the day, risk aversion prompted some shorts to cover their positions and this pushed the contract higher to close at 18,290 yuan/mt. The contract rebounded above several moving averages with pressure at the 18,300 yuan/mt level. We expect the contract to test pressure at 18,400 yuan/mt tonight with support at the 10-day moving average.

Tin: The SHFE 1901 contract slid to close with a nine-day losing streak, at 143,580 yuan/mt. Despite the potential of an a rally after significant selloffs, investors remained cautious ahead of the G-20 summit where US President Donald Trump and Chinese President Xi Jinping meet to discuss trade matters. We expect the contract to remain subdued in the short term.

Evening comments

For queries, please contact Frank LIU at liuxiaolei@smm.cn

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