SMM Evening Comments (Dec 19)

SHANGHAI, Dec 19 (SMM) – SHFE nonferrous metals ended lower for the most part on Wednesday as copper led the decline and fell 1.86%. Nickel lost 1.55%, zinc dipped 0.5%, aluminium dropped 0.47%, while tin nudged up, and lead rose 0.82%. 

The ferrous complex closed mixed as coking coal slumped 2.77%, coke slid 1.22%, while hot-rolled coil went up 0.47%, rebar and iron ore inched up. 

Copper: The SHFE 1902 contract mostly consolidated below the daily moving average today after a lower LME copper dragged it sharply overnight. It ended at the lowest level today at 48,090 yuan/mt, below the Bollinger lower band. Open interest surged 26,964 lots to 206,000 lots, and this led to an influx of 555 million yuan of capitals across all SHFE copper contracts today. We expect the 1902 contract to test support at 48,000 yuan/mt tonight. 

Aluminium: News around the central economic working conference and the latest Federal Reserve’s rate decision affected market sentiment, and this lowered both shorts and longs in the SHFE 1902 contract today. The contract dipped to an intraday low of 13,630 yuan/mt at noon, and rebounded to end at 13,665 yuan/mt. Open interests lost 10,572 lots, with longs accounting for the majority. We expect the contract to continue to trade weakly tonight. 

Zinc: With support at the 20-day moving average, the SHFE 1902 contract rallied at noon, and tested resistance at the 21,000 yuan/mt level twice in the afternoon. It failed to stand firm above that level and closed at 20,960 yuan/mt, with open interests down 6,738 lots. It is likely to again test pressure above at 21,000 yuan/mt tonight. 

Nickel: After an overnight slump, the SHFE 1905 contract received support at 89,000 yuan/mt and hovered within a narrow range on cautious sentiment. It ended at 89,380 yuan/mt, with pressure at the 89,500 yuan/mt level. As its KDJ indicator expanded downwards and the MACD red line shortened, we expect the contract to test support 89,000 yuan/mt tonight.

Lead: The SHFE 1902 contract traded along the Bollinger middle band and stood above all moving averages as longs entered the market. It settled at 18,080 yuan/mt with open interests up 1,324 lots. Tonight, the contract will test support at the 18,000 yuan/mt level. 

Tin: The SHFE 1905 contract started to climb up after dipped sharply to an intraday low of 145,440 yuan/mt after opening. Exiting shorts and a higher LME tin supported the contract, which recovered overnight losses and rose 420 yuan/mt on the day to settle at 146,630 yuan/mt. Pressure is seen at the 20-day moving average, or the 146,600 yuan/mt level.