SMM Evening Comments (Mar 4)

SHANGHAI, Mar 4 (SMM) – SHFE base metals, except for copper and tin, traded higher on Monday. Nickel rose 1.7%, zinc climbed close to 0.75%, aluminium gained 0.62% and lead crept 0.54%.

The ferrous complex also closed mixed. Rebar advanced 0.9%, iron ore increased by 0.65% and hot-rolled coil inched up 0.08%, while coking coal and coke dropped about 1.5%.

Copper: A sharp drop in LME three-month copper prompted longs in Shanghai to take profits, resulting in a decline in the most traded SHFE April copper contract in afternoon trade. SHFE copper lost 0.52% on the day to end at 50,010 yuan/mt, touching the 10-day moving average. It is expected to try to remain above the 10-day moving average at 49,900 yuan/mt tonight.

Aluminium: The most liquid SHFE May aluminium contract climbed to the day-high of 13,750 yuan/mt in afternoon trade as social inventories of primary aluminium ingots in China slowed growth and as spot trades occurred briskly. The contract advanced 0.62% to close the day at 13,735 yuan/mt. The anticipated consumption recovery and sufficient cash liquidation keep SHFE aluminium firm in the near term. The SHFE 1905 contract is expected to continue to hover around the five-day moving average tonight.

Zinc: While the most traded SHFE April zinc contract came off from a high of 22,320 yuan/mt in afternoon trade, it held onto most gains registered on Friday night to end the trading day 0.75% higher at 22,125 yuan/mt. Investors moved their positions to forward contracts. Social inventories of refined zinc in China continued their growth, suggesting that consumption has yet to substantially pick up. This, together with the losses in its LME counterpart during European trading hours, is likely to weigh on the SHFE 1904 contract to open lower and test the 22,000 yuan/mt level tonight.

Nickel: The most liquid SHFE May nickel contract hit a nearly five-month high of 105,630 yuan/mt in afternoon trade before it finished the day 1.7% higher at 104,910 yuan/mt. Its KDJ lines converged with an extended MACD red bar. The contract is expected to continue to test the upper Bollinger band tonight.

Lead: The most active SHFE April lead contract traded rangebound around the daily moving average during the day, with pressure at 17,735 yuan/mt. With gains in early trade of Friday night trading hours, the contract finished the trading day 0.54% higher at 17,710 yuan/mt. Some longs took profits during the day, indicating signs of waning upward momentum. The contract is expected to test support at 17,650 yuan/mt tonight.

Tin: The most active SHFE May tin contract extended losses on Friday night during the day and closed 0.38% lower at 150,300 yuan/mt.