SMM Evening Comments (Apr 2)

Published: Apr 02, 2019 18:04 (GMT+8)
SMM Evening Comments

SHANGHAI, Apr 2 (SMM) – SHFE nonferrous metals mostly ended lower on Tuesday April 2. Zinc lost 0.37%, lead dropped 0.33%, aluminium fell 0.25%, copper edged down, while nickel jumped 0.57%, and tin gained 0.21%. 

The ferrous complex, except for coking coal, closed higher on the day as iron ore increased 3.76%, rebar grew 1.62%, hot-rolled coil went up 0.53%, and coke ended 0.28% higher. 

Copper: The most-active SHFE May contract dropped from an initial high of 49,300 yuan/mt, as longs exited after the LME copper weakened. The contract rebounded to an intraday high of 49,370 yuan/mt in the afternoon, but failed to hold firm at highs and slid to end at 49,270 yuan/mt. Open interests lost 9,984 lots to 179,000 lots. With support from the 20- and 40- day moving averages, and bullish signs from the MACD indicators, the contract may test pressure above at 49,300 yuan/mt tonight. 

Aluminium: The most-liquid SHFE May contract lost some two-thirds of gains from Monday, as exiting longs dragged it to an intraday low of 13,730 yuan/mt and ended it at 13,770 yuan/mt. Open interests declined sharply by 13,016 lots to 249,000 lots. With support from consumption recovery, the contract is expected to rebound tonight. 

Zinc: Support from the five-day moving average stemmed the decline of the SHFE May contract after it slid to an intraday low of 22,660 yuan/mt. Exiting longs ended it 1.38% lower on the day at 22,815 yuan/mt, with open interests down 37,366 lots to 261,000 lots. Cautious investors are likely to see it around the Bollinger upper band tonight. 

Nickel: With support from the 102,000 yuan/mt level, the SHFE May contract jumped to an intraday high of 102,630 yuan/mt around noon after the US dollar weakened. Limited upward momentum lowered it to the daily moving average, and settled it at 102,230 yuan/mt. Open interests dropped 18,000 lots to 183,000 lots. Concerns about higher supplies in the near future caused a backwardation of the SHFE May and September contracts. As the KDJ indicators expanded upwards and the MACD green line shortened, the 1905 contract may trade with support from the 20-day moving average and test resistance at 103,200 yuan/mt tonight. 

Lead: The SHFE 1905 contract returned to a rangebound trend and lost gains from Monday. It fell below support at 16,800 yuan/mt and dipped to an intraday low of 16,775 yuan/mt, before closed at 16,820 yuan/mt. Fundamentals will provide limited rebound momentum tonight. 

Tin: As investors cut longs and shorts tonight, the SHFE 1905 contract remained at highs with the lowest of 147,840 yuan/mt near noon. It tested pressure from the 40-day moving average, before it settled at 148,700 yuan/mt. We expect it to continue to test the 40-day moving average in the short run. 

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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