SMM Evening Comments (Jan 15)

SHANGHAI, Jan 15 (SMM) – SHFE nonferrous ended mixed on Tuesday. Tin and lead rose 0.8%, zinc climbed 0.7% and nickel gained 0.3% while copper and aluminium dipped.

The ferrous complex also traded mixed. Rebar fell close to 1%, hot-rolled coil declined 0.8% and coking coal lost 0.4% while iron ore advanced 0.7% and coke jumped 1.2%.

Copper: As gains in LME copper prompted shorts to take profits, the SHFE 1903 contract climbed during the day. This helped the contract to pare overnight losses and end the trading day slightly lower at 47,000 yuan/mt. The contract stands below short-term moving averages and is expected to try to break through 47,000 yuan/mt tonight. The SHFE 1901 contract ended its trading with a settlement price of 46,880 yuan/mt and 5,375 mt being delivered.

Aluminium: The SHFE 1903 contract recovered overnight losses and ended the trading day slightly lower at 13,315 yuan/mt. The contract closed higher than opening for the first time in four consecutive trading days. The SHFE 1901 contract ended trading with 88,525 mt being delivered. The SHFE 1903 contract is unlikely to see substantial gains tonight given weak fundamentals.

Zinc: The SHFE 1903 contract extended overnight gains and finished the trading day 0.7% higher at 20,515 yuan/mt. Longs loading up bets helped the contract to shrug off resistance at the 20- and 40-day moving averages. The contract is unlikely to break resistance at the 60-day moving average tonight given current low consumption. The SHFE 1901 contract settled its trading at 21,490 yuan/mt with delivered volume of 2,700 mt.

Nickel: The SHFE 1905 contract rose to the day’s high of 92,260 yuan/mt before it traded rangebound to end at 92,070 yuan/mt, up 0.3% on the day. Its KDJ lines converged with a shortened MACD red bar. The contract is likely to try to break through the 60-day moving average tonight.

Lead: Bargain-hunting lifted the SHFE 1902 contract from earlier lows during the day. The contract closed at 17,555 yuan/mt, up 0.8% on the day. Its five-day moving average turned around and expanded upwards, suggesting that the contract stablised after previous declines. The contract is expected to trade rangebound in the short term and hover under pressure at the 10-day moving average tonight. The SHFE 1901 contract settled trading at 17,805 yuan/mt with 24,825 mt being delivered.

Tin: The SHFE 1905 contract crept to a high of 148,970 yuan/mt during the day as longs added their positions. The contract finished the trading day 0.8% higher at 148,950 yuan/mt. Resistance is seen at 150,000 yuan/mt. With gains in its LME counterpart, the SHFE 1905 contract is likely to remain strong in the near term.