SMM Evening Comments (Mar 22)

SHANGHAI, Mar 22 (SMM) – SHFE base metals traded mixed on Friday. Nickel saw the biggest loss of over 2%, copper fell close to 0.8%, aluminium lost about 0.3% and tin dipped 0.1% while zinc gained about 0.3% and lead advanced 0.5%.

The ferrous complex, except for rebar, traded higher. Coking coal rose 1.4%, coke climbed 1.2%, iron ore increased by some 0.5% and hot-rolled coil edged up 0.05%.

Copper: Losses in LME copper prompted shorts in Shanghai to add positions, and subdued SHFE copper during the day. The most traded SHFE copper May contract lost 0.77% on the day and ended at 48,940 yuan/mt. It fell below the five- and 10-day moving averages, and KDJ lines expanded downwards and met. The SHFE 1905 contract is likely to struggle to hang on above 48,900 yuan/mt tonight.

Aluminium: The most active SHFE aluminium May contract fluctuated during the day, paring some overnight losses to end the trading day 0.29% lower at 13,755 yuan/mt. While this week’s decline in social inventories of primary aluminium reflected recovering consumption, prices of A00 aluminium stayed at highs at the 14,000 yuan/mt level, bolstered by the upcoming tax cuts, weighed on prices of futures. The SHFE 1905 contract is expected to remain rangebound above the five-day moving average tonight.

Zinc: The most traded SHFE zinc May contract climbed in afternoon trade as gains in its LME counterpart prompted longs to buy. This helped it to recover from overnight losses to close the trading day 0.34% higher at 21,995 yuan/mt. Social inventories of refined zinc across Shanghai, Tianjin and Guangdong declined this week, while the three-month LME zinc rose during European trading hours. This is likely to buoy SHFE zinc tonight, helping the May contract to stand firmly above the 22,000 yuan/mt level.

Nickel: The most liquid SHFE nickel May contract traded in a tight range during the day, with pressure at 100,800 yuan/mt and support at 100,300 yuan/mt, and failed to recover overnight losses to end the trading day 2.12% lower at 100,500 yuan/mt. It is expected to struggle to hang on above the 100,000 yuan/mt level tonight.

Lead: As longs added and shorts cut their positions, the most traded SHFE lead May contract rebounded to close the trading day 0.5% higher at 16,980 yuan/mt. It is likely to climb above the 17,000 yuan/mt level tonight if its LME counterpart strengthens.

Tin: The most active SHFE tin May contract hovered between 147,800-148,200 yuan/mt during the day, slightly down from the previous day, and ended at 147,810 yuan/mt. It has switched to rangebound pattern after rising in the first three days of the week. Domestic inventories and relatively weak downstream demand capped gains in SHFE tin, while its robust LME counterpart and firm spot prices would offer support. The SHFE 1905 contract is expected to remain rangebound in the short run with resistance at 149,000 yuan/mt.