SMM Evening Comments (Feb 27)

SHANGHAI, Feb 27 (SMM) – SHFE nonferrous metals closed mixed on Wednesday February 27, as lead increased 0.35%, zinc rose 0.28%, while tin fell over 1%, nickel declined 0.51%, and aluminium and copper edged down. 

The ferrous complex also ended mixed. Coking coal grew 0.54%, hot-rolled coil climbed 0.46%, rebar went up 0.19%, while coke lost 0.24%, and iron ore dipped slightly. 

Copper: The SHFE 1904 contract lost support from the five-day moving average and the Bollinger upper band as longs exited. This came after it consolidated around 50,180-50,200 yuan/mt in the morning and notched an intraday high of 50,230 yuan/mt around noon. It settled at 50,080 yuan/mt, with open interests down 9,638 lots to 242,000 lots. Open interests across all SHFE copper contracts lost 2,234 lots, with longs taking up the majority. Tonight, we see the 1904 contract testing support at 50,000 yuan/mt. 

Aluminium: Limited buoyance from fundamentals ceased increase of the SHFE 1905 contract at 13,735 yuan/mt at noon. The contract fell below the daily moving average in the afternoon, and closed lower for the second consecutive trading day, at 13,690 yuan/mt. This remained above all moving averages. As consumption has yet to completely recover, a lack of confidence in longs is likely to see the contract around 60-day moving average, or above the 13,600 yuan/mt level tonight. 

Zinc: The SHFE 1904 contract found support from the five-day moving average despite pressure from accumulated stocks across domestic warehouses. A stronger LME zinc also buoyed the prices. The contract ended 125 yuan/mt higher on the day at 21,830 yuan/mt. Open interests continued to shrink by 908 lots, to 233,000 lots. With support at the five-day moving average, it is likely to trade robustly, rangebound tonight. 

Nickel: The SHFE 1905 contract registered the third consecutive trading day of decline as rising shorts and pressure from the 102,000 yuan/mt level dragged it to a low of 100,830 yuan/mt, and ended it at 101,190 yuan/mt. Open interests expanded by 15,000 lots to 323,000 lots. It is expected to test support at 101,000 yuan/mt tonight as the MACD red line shortened. 

Lead: The SHFE 1904 contract extended its rangebound trend around the daily moving average, with support at 17,090 yuan/mt. It closed at 17,145 yuan/mt, with open interests down 2,902 lots to 46,448 lots. The contract is expected to continue to test the 17,000 yuan/mt level amid cautious investors tonight. 

Tin: The SHFE 1905 contract extended its overnight trend as it consolidated below the daily moving average, or 150,600 yuan/mt. It settled at 150,350 yuan/mt, after dipped to a low of 150,020 yuan/mt near closing. Exiting longs dragged the contract, but the 10-day moving average provided support. Tonight, it is likely to test support at 150,000 yuan/mt.