SMM Evening Comments (Dec 14)

SHANGHAI, Dec 14 (SMM) – SHFE nonferrous metals closed lower for the most part, while the ferrous complex extended gains across the board on Friday.

Zinc lost over 1%, copper and lead fell more than 0.5%, aluminium inched down, while nickel and tin grew slightly. Coking coal surged over 2%, rebar, iron ore, and hot-rolled coil increased more than 1%, and coke jumped 0.45%.

Copper: A higher US dollar and weaker LME copper dragged the SHFE 1902 contract below the 49,000 yuan/mt level, after it opened at an intraday high of 49,230 yuan/mt. It closed at 48,890 yuan/mt, with open interests up 6,652 lots to 186,000 lots. Some 6.85 million yuan of capitals entered SHFE copper contracts, the smallest across base metals today. With pressure from the Bollinger middle band, the contract is likely to test support at 49,000 yuan/mt tonight. 

Aluminium: The SHFE 1902 contract ceased its increase after rose twice to an intraday of 13,665 yuan/mt. With pressure from a stronger US dollar above 97, it dipped to a low of 13,630 yuan/mt and ended at 13,640 yuan/mt. Continued weak fundamentals will see the contract testing resistance at the five-day moving average tonight. 

Zinc: A buildup of shorts lowered the SHFE 1902 contract below the five-day moving average, approaching the 60-day moving average. Its lower LME counterpart during the European trading session also weighed on prices. The contract closed 310 yuan/mt lower on the day at 20,665 yuan/mt, with open interests up 17,540 lots to 244,000 lots. We expect it to hover below the 20-day moving average tonight. 

Nickel: The SHFE 1905 contract faced pressure from the daily moving average and traded weakly with a low of 88,910 yuan/mt. It closed slightly higher on the day at 89,060 yuan/mt, with open interest down 1,000 lots to 299,000 lots. We expect the contract to test support at 88,500 yuan/mt tonight.

Lead: Investors covered longs and added shorts amid risk aversion, and this weighed the SHFE 1901 contract to an intraday low of 18,355 yuan/mt near closing. It dipped to around the Bollinger middle band and ended at 18,390 yuan/mt, with continued support at the 20-day moving average. We expect it to test support at the 20-day moving average tonight. 

Tin: The SHFE 1905 contract came off from an intraday high of 147,070 yuan/mt in the afternoon. It closed slightly higher on the day at 146,420 yuan/mt. The contract will maintain its rangebound trend tonight.