SMM Evening Comments (Apr 2)

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.