SMM Evening Comments (Jan 10)

SHANGHAI, Jan 10 (SMM) – SHFE nonferrous metals saw moderate changes on Thursday. Lead fell 0.5%, zinc slipped 0.3%, copper dipped 0.06% and aluminium inched down 0.04% while nickel edged up 0.05% and tin rose 0.1%.

The ferrous complex, except for coking coal, traded lower. Coke dropped 1.4%, iron ore declined 1.2%, rebar fell 0.3% and hot-rolled coil slid close to 0.1%,

Copper: The SHFE 1903 contract fell to a low of 47,420 yuan/mt shortly after morning trades began. It regained some losses to close the trading day lower at 47,510 yuan/mt. As the J-line turned around, shorts could load up their bets at highs. The contract is expected to try to hold its ground at 47,500 yuan/mt tonight.

Aluminium: The SHFE 1903 contract saw losses shortly after opening as shorts added close to 1,800 lots in 10 minutes. It closed the trading day lower at 13,405 yuan/mt. Mixed macroeconomic developments and continued weak fundamentals kept SHEF aluminium rangebound during the day. The contract is expected to continue this pattern tonight.

Zinc: The SHFE 1903 contract relinquished overnight gains to close the trading day 0.3% lower at 20,415 yuan/mt. Open interest for the 1901 and 1902 contract decreased by a total of over 15,000 lots on the day, suggesting poor risk appetite among investors as consumption weakened. With the loss in its LME counterpart during European trading hours, the SHFE 1903 contract might post a lower open and test support at the five-day moving average tonight.  

Nickel: The SHFE 1905 contract fluctuated to end the trading day higher at 91,560 yuan/mt. Its KDJ lines expanded upwards with an extended MACD red bar. The contract is likely to try to break through 92,000 yuan/mt tonight.

Lead: The SHFE 1902 contract remained rangebound today and finished the trading day 0.5% lower at 17,450 yuan/mt. Some longs covered their positions as bearish sentiment prevailed the market. This, together with weaker-than-expected pre-holiday downstream stockpiling, weighed on SHFE lead. The contract is likely to trade below the five-day moving average tonight.

Tin: The SHFE 1905 contract hovered in a tight range and ended the trading day 0.1% higher at 146,350 yuan/mt. It now stands above the five-, 10- and 20-day moving averages but faces resistance at the 40-day moving average.