SMM Evening Comments (Mar 21)

SHANGHAI, Mar 21 (SMM) – SHFE base metals, except for nickel, closed higher on Thursday. Lead rose some 0.8%, zinc climbed close to 0.7%, tin and aluminium gained close to 0.4%, and copper advanced about 0.3%.

The ferrous complex traded mixed. Coking coal and coke crept about 0.3%, while hot-rolled coil and rebar fell some 0.3%, and iron ore lost 0.2%.

Copper: Following overnight rapid gains in LME copper on a dovish Fed, the most liquid SHFE copper May contract climbed to the 49,440 yuan/mt level in morning trade. It traded rangebound in the afternoon and closed the day 0.26% higher at 49,420 yuan/mt. The contract remains under the pressure from the middle Bollinger band as consumption recovery has yet to manage to lower domestic inventories. SHFE copper is expected to try to stand firmly above 49,400 yuan/mt tonight.

Aluminium: The most active SHFE aluminium May contract hit a new nearly three-month high of 13,840 yuan/mt after SMM reported a decline of some 20,000 mt in social inventories of primary aluminium in China for the week ended March 21. As longs took profits, the contract later pared some gains to end at 13,810 yuan/mt, up 0.36% on the day. It is expected to trade rangebound tonight as prices of spot A00 aluminium have broken through 14,000 yuan/mt.

Zinc: The most traded SHFE zinc May contract rose to a high of 22,035 yuan/mt before it fell below the daily moving average to close the trading day 0.69% higher at 21,895 yuan/mt. Investors moved their positions to forward contracts with open interest for the May and June contracts expanding over 27,000 lots on the day. LME zinc rapidly rose in European trading hours, which would buoy its SHFE counterpart tonight. Continued high domestic inventories might hamper upward momentum in SHFE zinc.

Nickel: As shorts aggressively loaded up their bets, the most liquid SHFE nickel May contract tumbled shortly before noon closing. It failed to recover from those losses in afternoon trade and finished the trading day 0.32% lower at 102,240 yuan/mt. The contract is expected to try to hang on above the 10-day moving average tonight.

Lead: As longs added and shorts cut their positions, the most traded SHFE lead May contract climbed towards the 17,000 yuan/mt level during the day. It ended the trading day 0.83% higher at 16,990 yuan/mt. This helped slow the downtrend of the five-day moving average. With a robust LME counterpart, SHFE lead is expected to extend its gains to stand above 17,000 yuan/mt tonight.

Tin: The most liquid SHFE tin May contract notched a fresh high of 148,470 yuan/mt in afternoon trade before it pared some gains to end at 148,050 yuan/mt, up 0.37% on the day. Its rising LME counterpart and firm prices of domestic spot cargoes supported SHFE tin, which is expected to remain strong in the short run, with resistance at 149,000 yuan/mt.