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SMM Evening Comments (Dec 10)
Dec 10,2018 17:24CST
price review forecast
SMM Evening Comments

SHANGHAI, Dec 10 (SMM) – SHFE nonferrous and ferrous metals nudged up for the most part on Monday. Aluminium jumped 0.55%, nickel grew 0.41%, lead and tin went up slightly, while zinc lost 0.84%, and copper edged down. 

Iron ore gained 0.79%, coking coal rose 0.42%, coke closed slightly higher, while rebar declined 1.69%, and hot-rolled coil went down 0.58%.

Copper: The SHFE 1902 contract lost support at the 49,000 yuan/mt level at noon after it unsuccessfully tested its intraday high of 49,060 yuan/mt in the morning. It consolidated at 48,985 yuan/mt in the afternoon, settling slightly lower on the day at 48,930 yuan/mt. Its open interests grew 7,388 lots, with some 70.22 million yuan of capital entering all SHFE copper contracts, the greatest among base metals. We expect the 1902 contract to again test pressure at 49,000 yuan/mt tonight as its MACD green line lengthened and the KDJ indicators expanded downwards. 

Aluminium: A weaker US dollar supported the SHFE 1901 contract, which climbed along the five-day moving average, to an intraday high of 13,680 yuan/mt. China's exports of unwrought aluminium and aluminium products rallied in November, and this also buoyed market sentiment. However, weak fundamentals weighed  the contract to settle at 13,635 yuan/mt, below the five- and 10-day moving averages. The contract may continue its weak trend tonight. 

Zinc: The SHFE 1902 contract tested resistance at the 21,000 yuan/mt level fell back to around the 60-day moving average after it hit a high of 21,020 yuan/mt. It settled at 20,915 yuan/mt with open interests up 4,656 lots to 212,000 lots. Weak downstream orders limited its upward momentum. We see it hovering weakly below 21,000 yuan/mt tonight. 

Nickel: The SHFE 1905 contract rebounded at noon after it fell to a low of 88,530 yuan/mt. Both longs and shorts accumulated today, resulting in an increase of 17,000 lot in open interests. The contract settled 130 yuan/mt higher on the day at 89,310 yuan/mt. As it KDJ indicators expanded downwards and the MACD red line shortened, we expect the contract to test support at 89,000 yuan/mt tonight. Investors would take more cues tonight from the US Job Openings and Labor Turnover Survey (JOLTS) results for October.

Lead: The SHFE 1901 contract closed higher on the day but remained in a rangebound pattern. It received support at 18,480 yuan/mt after exiting longs lowered it from 18,550 yuan/mt in the afternoon. Closing at 18,530 yuan/mt today, the contract saw open interests lose 1,598 lots to 52,712 lots. We expect it to consolidate around 18,500 yuan/mt tonight. 

Tin: The SHFE 1901 contract recovered losses of the morning as it rallied from a low of 144,100 yuan/mt at noon. It closed at 144,720 yuan/mt, with open interest down 918 lots. The contract is expected to trade with pressure in the short run. 

Evening comments
Futures movement

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