SMM Evening Comments (Jan 9)

SHANGHAI, Jan 9 (SMM) – SHFE base metals ended in the black across the board on Wednesday December 9. Zinc surged 1.4%, tin jumped 1.1%, copper and nickel climbed 0.7%, lead gained 0.5% and aluminium inched up 0.3%.

The ferrous complex saw mixed performance. Hot-rolled coil rose 0.7%, rebar and coking coal edged up 0.1% while coke slipped 0.4% and iron ore lost 0.6%.

Copper: Gains in LME copper bolstered the SHFE 1903 contract today, which finished the trading day 0.7% higher at 47,680 yuan/mt. It hit the day’s high of 47,820 yuan/mt at noon. The contract stood firmly above the five-day moving average and approached the 10-day moving average. It is likely to try to break the 47,900 yuan/mt level tonight.

Aluminium: News that the leaders of seven committees in the US House of Representatives have asked the Treasury Department to delay plans to lift sanctions on Rusal prompted shorts to reduce positions of over 4,000 lots in 20 minutes before closing. This pushed up the SHFE 1903 contract to end at the day’s high of 13,475 yuan/mt, up 0.3% on the day, and recovered losses made in the previous day. The contract is likely to trade rangebound at highs tonight.

Zinc: As longs aggressively added their bets, the SHFE 1903 contract jumped to end the trading day 1.4% higher at 20,600 yuan/mt, posting a five-day winning streak and standing above the 20- and 40-day moving averages. Positive macroeconomic developments eased the pressure from weakening consumption, with the contract having pared most of previous losses. The contract is likely to struggle to break through the 60-day moving average tonight as upward momentum is likely to wane after optimistic sentiment fades.

Nickel: As longs took profits, the SHFE 1905 contract erased some of earlier gains to end at 91,340 yuan/mt, up 0.7% on the day. Its KDJ lines diverged and expanded upwards with an extended MACD red bar. It is expected to try to stand firmly above 91,000 yuan/mt tonight.

Lead: The SHFE 1902 contract climbed to end the trading day 0.5% higher at 17,570 yuan/mt, as shorts took profits. Gains in its LME counterpart might provide some support to the SHFE contract tonight.

Tin: The SHFE 1905 contract sharply extended overnight gains to finish the trading day 1.1% higher at 146,900 yuan/mt, near the previous highs around 147,000 yuan/mt. It now stands above the five-, 10- and 20-day moving averages, with resistance at the 40-day moving average.