SMM Evening Comments (Apr 8)

SHANGHAI, Apr 8 (SMM) – SHFE nonferrous metals ended mixed on Monday April 8. Tin grew nearly 0.2%, aluminium gained 0.1%, lead nudged up, while copper and nickel lost almost 0.4%, and zinc slid some 1.1%.

The ferrous complex closed higher as iron ore and rebar jumped over 4%, hot-rolled coil increased over 3%, coke went up nearly 2.6%, and coking coal rose 1%. 

Copper: A higher LME copper bolstered the most-traded SHFE May contract to a high of around 49,360 yuan/mt in the morning, before exiting longs dragged it to an intraday low of 49,220 yuan/mt and kept it around the daily moving average till closing. The contract settled at 49,260 yuan/mt, with open interests down 8,438 lots to 174,000 lots. The 20-day moving average provided support while the 50-day moving average provided resistance. We expect the contract to test pressure from the five-day moving average, or 49,400 yuan/mt tonight. 

Aluminium: The most-active SHFE May contract declined to the 20-day moving average after growing longs lifted it to a week-high of 13,850 yuan/mt in the morning. As both longs and shorts exited, the contract closed slightly higher from the previous trading day at 13,805 yuan/mt. Domestic inventories of primary aluminium shrank some 8,000 mt during the Qingming holiday as consumption rebound. This may expand upward room in the contract tonight.  

Zinc: The SHFE 1905 contract dropped after it strengthened today, as leaving longs lowered prices to a low of 22,835 yuan/mt in the afternoon. It ended below the Bollinger upper band, at 22,850 yuan/mt, as the decline in social inventories of refined zinc came slower than market expectations. A buildup in LME zinc inventories also weighed on prices. Tonight, we expect the SHFE May contract to open at lows and hover below the 23,000 yuan/mt level. 

Nickel: A robust LME nickel bolstered the most-liquid SHFE May contract after opening, but a lack of confidence in longs lowered it from a high of 103,160 yuan/mt, and keep it around the daily moving average in the afternoon. It closed at 103,100 yuan/mt with open interests down 12,000 lots to 154,000 lots. As the MACD red line lengthened, the contract is likely to test support at the five-day moving average tonight. 

Lead: The SHFE 1905 contract extend its rangebound trend as it rebounded from a low of 16,805 yuan/mt after it slid from a high of 16,945 yuan/mt. Investors remained cautious at the psychological level of 16,800 yuan/mt. We expect a higher LME lead to buoy the SHFE May contract tonight, but it is unlikely to break pressure from 17,000 yuan/mt.   

Tin: As shorts exited, the SHFE May contract rebounded from an intraday low of 147,720 yuan/mt, and jumped above the daily moving average to close at a high of 148,690 yuan/mt. It traded around the five- and 60-day moving averages today, with open interests lost 428 lots to 20,642 lots. Resistance above was at the 40-day moving average. Tonight, it is expected to trade with support at 147,500 yuan/mt and pressure at 149,000 yuan/mt.