SMM Evening Comments (Jan 8)

SHANGHAI, Jan 8 (SMM) – SHFE nonferrous metals traded mixed on Tuesday January 8. Lead dropped 1.3%, aluminium lost 0.6% while copper edged up 0.1%, nickel inched up 0.2%, tin gained 0.3% and zinc climbed 0.8%.

The ferrous complex also saw mixed performances. Iron ore advanced 0.9%, hot-rolled coil popped 0.6%, rebar nudged up 0.2% while coke dipped 0.2% and coking coal fell 0.3%.

Copper: The SHFE 1903 contract hovered around the daily moving average in a tight range and ended at 47,340 yuan/mt, up 0.1% on the day. About 125 million yuan left the SHFE copper complex today, the most among nonferrous metals. The contract is expected to try to break 47,500 yuan/mt tonight.

Aluminium: Accumulated shorts weighed on the SHFE 1903 contract after opening, and dragged it to a low of 13,380 yuan/mt near noon. As macroeconomic optimism waned, weak fundamentals ended the contract at 13,390 yuan/mt with open interests up 9,380 lots to 255,000 lots. Tonight, it is expected to trade weakly and test support below.

Zinc: The SHFE 1903 contract regained earlier losses and held onto most of its overnight gains during the day. The contract ended the trading day 0.8% higher at 20,365 yuan/mt. It has risen for four consecutive trading days with its KDJ lines creating a golden cross. However, weak consumption and resistance at the 20- and 40-day moving averages might limit upside room in the contract. We expect the SHFE 1903 contract to hover at the 10-day moving average tonight.

Nickel: As longs cut their bets, the SHFE 1905 contract fell past the 40-day moving average to a low of 90,250 yuan/mt in afternoon trade. It then recovered those losses to end the trading day 0.2% higher at 90,830 yuan/mt. Its KDJ lines diverged and expanded upwards with an extended MACD red bar. The contract is likely to try to stand firmly above the 40-day moving average tonight.

Lead: After hovering around the daily moving average in the morning, the SHFE 1902 contract faced pressure from shorts and slumped to a four-month low of 17,365 yuan/mt. It broke support at the Bollinger lower band, and closed at 17,410 yuan/mt with open interests up 1,494 lots. Slower downstream purchases from a year ago grew shorts in the market. We expect the contract to consolidate weakly at lows tonight.

Tin: The SHFE 1905 contract hovered within a broad range today as it rebounded from an intraday low of 144,900 yuan/mt right after opening. With support at the five- and 10-day moving averages, the contract unsuccessfully tested pressure at 145,600 yuan/mt and settled at 145,220 yuan/mt. It will trade with continued pressure at the 20-day moving average tonight.