SMM Evening Comments (Jan 21)

SHANGHAI, Jan 21 (SMM) – SHFE nonferrous metals, except for tin, ended in the black on Monday. Nickel grew 1.7%, zinc jumped 1.2%, aluminium climbed 1.1%, copper gained 0.4% and lead rose 0.3%

The ferrous complex traded mixed. Iron ore gained 2.2%, rebar grew 1.4% and hot-rolled coil advanced 0.6% while coke fell 1.1% and coking coal dropped 1.9%.

Copper: As longs cut their positions, the SHFE 1903 contract fell below the daily moving average shortly after opening. It then weakened under pressure from the daily moving average and ended at 47,800 yuan/mt, up 0.4% on the trading day. The contract is likely to try to hold onto the 47,800 yuan/mt level tonight.

Aluminium: The SHFE 1903 contract lost some overnight gains in morning trades and inched up in a tight range in the afternoon. It finished the trading day 1.1% higher at 13,535 yuan/mt. After two days of gains, the contract stood firmly above the five- and 10-day moving averages. It is unlikely to sustain upward momentum given its relatively weak fundamentals.

Zinc: The SHFE 1903 contract traded rangebound under pressure from the daily moving average and closed 1.2% higher at 21,420 yuan/mt. Open interest for the February and March contracts shrank some 25,000 lots on the day. Without clear direction, the 1903 contract is likely to continue its rangebound pattern below the daily moving average tonight.

Nickel: The SHFE 1905 contract held onto most of Friday night gains to close at 94,980 yuan/mt, up 1.7% on the day. Its KDJ lines converged with an extended MACD red bar. The contract is likely to hover around 95,000 yuan/mt tonight.

Lead: As shorts added and longs cut their bets, the SHFE 1902 contract fell to an intra-day low of 17,685 yuan/mt in morning trades. As short-term shorts took profits, the contract recovered most of its losses. Shortly before closing, the contract came off, as risk aversion sentiment drove some longs to cover positions. The 1902 contract closed the trading day 0.3% higher at 17,715 yuan/mt. The 1903 contract became the most liquid SHFE lead contract today. Longs pushed the SHFE 1903 contract to an intra-day high of 17,710 yuan/mt before significant resistance from the 60-day moving average depressed the contract to 17,570 yuan/mt. It ended the day 0.3% higher at 17,580 yuan/mt. The contract is likely to halt recent gains in the near term and to test pressure at the 60-day moving average tonight, with support at the 20-day moving average.

Tin: The SHFE 1905 contract dropped to a day-low of 147,070 yuan/mt shortly after opening. Short-covering helped it recover those losses. The contract ended the trading day 0.07% lower at 147,970 yuan/mt. Support remained at 147,000 yuan/mt.