SMM Evening Comments (Dec 25)

SHANGHAI, Dec 25 (SMM) – SHFE nonferrous and ferrous metals, except for aluminium, dipped across the board on Tuesday.

Nickel dropped 1.5%, tin lost nearly 1%, zinc fell 0.84%, copper declined 0.44%, and lead went down 0.3%. Coke slumped 4.67%, coking coal slid over 2%, rebar dipped nearly 2%, hot-rolled coil decreased 1.78%, and iron ore closed 0.72% lower.    

Copper: The SHFE 1902 contract slumped to an intraday low of 47,500 yuan/mt near noon as shorts accumulated after a slump in oil prices grew market concerns. The contract settled at 48,010 yuan/mt with open interests down 8,512 lots to 184,000 lots. While support from the Bollinger lower band remained today, the contract will continue to test support at that level tonight, and to hover around 47,910 yuan/mt. 

Aluminium: The SHFE 1902 contract broke pressure above from almost all moving averages, as it climbed from noon and rose to an intraday high of 13,795 yuan/mt near closing. It gained for the fourth consecutive trading day while other base metals ended lower today. We expect it to test resistance at the 40-day moving average tonight, as its KDJ indicator expanded upwards and the MACD red line lengthened significantly. 

Zinc: As longs exited the market at noon, the SHFE 1902 contract fell to an intraday low of 20,360 yuan/mt. Support from high spot premiums and low inventories drove the contract to rebound in the afternoon, and close at 20,640 yuan/mt. Supportive fundamentals are likely to keep it hovering below the Bollinger middle band tonight. The Bollinger higher band will continue to pressure the contract.  

Nickel: The SHFE 1905 contract was pulled by a buildup of longs in the afternoon, after it dipped to a low of 88,390 yuan/mt. Pressure above at 89,100 yuan/mt ended it at 88,880 yuan/mt, with open interests up 1,000 lots to 296,000 lots. We expect it to consolidate around 89,000 yuan/mt tonight as its MACD red line shortened. 

Lead: The SHFE 1902 contract failed to receive continued support at the 60-day moving average, as rising shorts dragged it to an intraday low of 17,820 yuan/mt. It ended at 17,835 yuan/mt, between the Bollinger middle and lower bands, with open interests up 1,322 lots to 58,138 lots. We see it testing support at the 60-day moving average tonight. 

Tin: The SHFE 1905 contract declined to the lowest since December, at 145,360 yuan/mt, pressured by growing shorts and lower prices of crude oil. The contract settled at 145,440 yuan/mt with open interests up 674 lots to 31,274 lots. It will trade weakly rangebound, and test support below at 145,000 yuan/mt tonight.