SMM Evening Comments (Dec 20)

SHANGHAI, Dec 20 (SMM) – SHFE nonferrous and ferrous metals ended mixed on Thursday. Zinc, nickel, and lead nudged up, aluminium went flat, while copper lost 0.37%, and tin inched down. 

Iron ore jumped nearly 2%, rebar rose over 1%, hot-rolled coil and coke edged up, while coking coal fell some 1%. 

Copper: A buildup of shorts dragged down the SHFE 1902 contract sharply to a low of 47,770 yuan/mt at noon. Though rebounded in the afternoon, the contract diverged from the daily moving average, and fell below the Bollinger lower band to settle at 48,220 yuan/mt. As its MACD green line expanded, we expect it to test support at the 48,000 yuan/mt level tonight. 

Aluminium: Expectations of supportive policies to be issued at the central economic working conference buoyed market sentiment, and this pulled the SHFE 1902 contract from a low of 13,605 yuan/mt at noon. The contract rebounded above the daily moving average and the Bollinger higher band, ending at 13,690 yuan/mt. Open interest increased 5,818 lots, with longs accounting for the majority. We expect it to test support at the five-day moving average tonight. 

Zinc: The SHFE 1902 contract fell from a high of 21,155 yuan/mt in the morning, and received support at the 40-day moving average at noon. After unsuccessfully tested pressure at the 60-day moving average, it closed at 20,945 yuan/mt. Open interests fell 11,456 lots to 210,000 lots. We see it trading rangebound tonight with support at the 40-day moving average. 

Nickel: The SHFE 1905 contract fell below three moving averages at noon as longs exited the market. As shorts also left in the afternoon, the contract rallied to a high of 90,250 yuan/mt and closed at 90,080 yuan/mt. Open interest shrank 19,000 lots to 285,000 lots. As its KDJ indicator expanded upwards and the MACD red line lengthened, we expect the contract to consolidate around 90,000 yuan/mt tonight.

Lead: The SHFE 1902 contract came off after it jumped to an intraday high of 18,170 yuan/mt. Pressure from the 10-day moving average limited its upward momentum. It settled at 18,045 yuan/mt, and may consolidate around 18,000 yuan/mt tonight. 

Tin: The SHFE 1905 contract traded weakly today as it dipped after opening and closed at an intraday low of 145,850 yuan/mt. Support below is expected at 145,000 yuan/mt tonight, while resistance above will be at 147,500 yuan/mt.