SMM Evening Comments (Mar 20)

SHANGHAI, Mar 20 (SMM) – SHFE base metals, except for copper, closed higher on Wednesday. Nickel saw the biggest gain of 1.5%, zinc rose some 1.3%, aluminium and tin gained about 0.9% and lead inched up close to 0.1%.

The ferrous complex, except for coke, traded lower. Iron ore dropped more than 5%, coking coal declined close to 1%, rebar fell close to 0.5% and hot-rolled coil lost 0.4%.

Copper: The most traded SHFE copper May contract hovered between positive and negative terrains during the day and closed 0.12% lower at 49,190 yuan/mt, reflecting pressure from the middle Bollinger band. It is expected to try to stand above 49,200 yuan/mt tonight.

Aluminium: As longs added their positions, the most liquid SHFE aluminium May contract hit a nearly three-month high of 13,825 yuan/mt in afternoon trade. It closed the trading day 0.91% higher at 13,795 yuan/mt. Downstream consumption recovery and high spot premiums accounted for recent gains in SHFE aluminium. The contract is expected to remain strong tonight.

Zinc: The most active SHFE zinc May contract extended overnight gains to end the trading day 1.34% higher at 21,860 yuan/mt. Open interest for the contract expanded over 10,000 lots and the spreads between the April and May contracts narrowed from 200 yuan/mt to 75 yuan/mt. As its LME counterpart climbed during European trading hours, the SHFE 1905 contract is expected to open higher tonight, with support at the five-day moving average.

Nickel: The most traded SHFE nickel May contract held onto overnight gains during the day and finished the trading day 1.54% higher at 102,680 yuan/mt. It came off the 20-day moving average for several times, suggesting strong pressure at that level. The contract is expected to continue its efforts to break through the 20-day moving average tonight.

Lead: As shorts loaded up their bets, the most active SHFE lead May contract fell to a nearly four-week low of 16,780 yuan/mt in early morning trade. Bargain-hunting helped the contract recover from those losses to end close to 0.1% higher at 16,875 yuan/mt. With the five- and 10-day moving averages expanding downwards, a dollop of shorts at high levels are likely to keep SHFE lead from rising substantially. The contract is expected to remain rangebound at lows tonight.

Tin: The most liquid SHFE tin May contract climbed above the 60-day moving average to close at the day’s high of 147,980 yuan/mt, up 0.86% on the day. In the physical market, most sellers held their offers firm ahead of the value-added tax cuts. This offered support to prices of futures. The contract is expected to remain robust in the short run, with resistance at 149,000 yuan/mt.