SMM Evening Comments (Dec 13)

SHANGHAI, Dec 13 (SMM) – SHFE nonferrous metals ended higher for the most part, while the ferrous complex rose across the board on Thursday.

Copper, aluminium, nickel, and tin nudged up, while zinc went down 0.73%, and lead edged down. Hot-rolled coil surged 4.2%, coking coal jumped 3.36%, rebar and coke increased nearly 2%, and iron ore closed 0.42% higher. 

Copper: A buildup of longs and a rally in LME copper buoyed the SHFE 1902 contract to a high of 49,390 yuan/mt near noon. It settled 110 yuan/mt higher from Wednesday, at 49,340 yuan/mt, but failed to stand firm above the five-day moving average. Open interests grew 632 lots to 179,000 lots. As its MACD green line shortened, we expect the contract to test resistance at 49,500 yuan/mt tonight. 

Aluminium: As investors covered their shorts and added longs, SHFE aluminium rallied from a low of 13,595 yuan/mt to an intraday high of 13,700 yuan/mt near noon. A significant decline in primary aluminium social inventories grew confidence across longs, against a backdrop of production cuts across domestic smelters. The contract recovered overnight losses and closed 10 yuan/mt higher on the day at 13,670 yuan/mt, but remained below the 10-day moving average. It is expected to test pressure at the five-day moving average tonight. 

Zinc: The SHFE 1902 contract climbed above the daily moving average in the morning but failed to extend their increase in the afternoon, as longs exited and settled the contract at 20,975 yuan/mt. Open interests lost 536 lots to 227,000 lots today. We expect it to trade weakly above the 60-day moving average tonight. 

Nickel: The SHFE 1905 contract received support at 88,000 yuan/mt after it dipped to an intraday low of 88,140 yuan/mt. As the US dollar weakened at noon, the contract climbed to a high of 89,650 yuan/mt and closed slightly higher from Wednesday at 89,460 yuan/mt. This ended seven consecutive trading days of decline. As its KDJ indicators expanded upwards and the MACD red line lengthened, we expect the contract to hover around 89,000 yuan/mt tonight.

Lead: The SHFE 1901 contract came off after it jumped to an intraday high of 18,550 yuan/mt shortly after opening. Longs and shorts left the market, and the contract traded along the five-day moving average and settled lower on the day at 18,500 yuan/mt. Open interests shrank 2,860 lots to 50,180 lots. Tonight, we expect the contract to consolidate around 18,500 yuan/mt. 

Tin: A stronger LME tin buoyed the SHFE 1905 contract to a high of 146,750 yuan/mt, after the contract consolidated around 146,100 yuan/mt in the morning. It closed at 146,670 yuan/mt, up 770 yuan/mt on the day. Pressure above is seen at 147,000 yuan/mt tonight.