SMM Evening Comments (Jan 16)

SHANGHAI, Jan 16 (SMM) – SHFE nonferrous metals ended in the black on Wednesday after China signalled more stimulus measures on Tuesday. Zinc surged 2.4%, nickel jumped 1.6%, copper climbed 1.1%, aluminium rose 0.9%, lead gained 0.7% and tin advanced 0.5%.

The ferrous complex traded mixed. Coke increased by 1.2%, iron ore popped 0.5% and hot-rolled coil gained 0.4% while coking coal dropped 0.6%. Rebar stayed flat.

Copper: Following a jump in its LME counterpart, the SHFE 1903 contract accelerated gains in the afternoon after hovering in a tight range in the morning. The contract ended the trading day more than 1% higher at 47,380 yuan/mt. This helped it to recover losses from the last three trading days. The contract is expected to try to break through 47,500 yuan/mt tonight.

Aluminium: As shorts took profits, the SHFE 1903 contract extended gains to close the trading day 0.9% higher at 13,400 yuan/mt. This helped it to stand above the five- and 10-day moving averages. The rebound is unlikely to sustain after the market prices in the stimulus signals from the central authorities. 

Zinc: The SHFE 1903 contract shrugged off the resistance at the 60-day moving average during the day and finished the trading day 2.4% higher at 20,860 yuan/mt. Weak consumption by year-end is likely to erode upward momentum in SHFE zinc, which is expected to trade under pressure at the upper Bollinger band tonight.

Nickel: The SHFE 1905 contract extended overnight gains to close the trading day 1.6% higher at 93,230 yuan/mt. Its KDJ lines expanded upwards with an extended MACD red bar. The contract is expected to try to stand firmly above the 60-day moving average tonight.

Lead: Riding on gains across the nonferrous complex, the SHFE 1902 contract jumped past the 10-day moving average in afternoon trades and ended the trading day 0.7% higher at 17,590 yuan/mt. Shorts appeared keen to take profits and the five-day moving average held stable. The contract is likely to trade rangebound at lows in the near term and trade around the 10-day moving average tonight, with support at the five-day moving average.

Tin: The SHFE 1905 contract gave up some gains after hitting the day’s high of 149,170 yuan/mt. It finished the trading day 0.5% higher at 148,790 yuan/mt. Trades were thin today and prices were rangebound.