SMM Evening Comments (Apr 9)

SHANGHAI, Apr 9 (SMM) – SHFE nonferrous metals ended mixed on Tuesday April 9. Copper led increases and rose 1.06%, nickel grew 0.43%, lead gained 0.18%, while zinc slid 1.45%, aluminium and tin fell 0.07%. 

The ferrous complex mostly closed higher as rebar jumped 1.9%, iron ore advanced 0.71%, hot-rolled coil increased 0.56%, while coking coal lost 1.99%, and coke declined 1.25%. 

Copper: The most-active SHFE copper contract shifted to the June contract, which received support from its LME counterpart and rose to a high of 49,990 yuan/mt near closing. Longs entered and grew open interests in the contract by 25,000 lots to 182,000 lots. Support from LME copper is likely to raise the contract above 50,000 yuan/mt tonight. The SHFE May contract also strengthened and closed at 49,790 yuan/mt after it jumped to a high of 49,840 yuan/mt. 

Aluminium: Lower domestic inventories of primary aluminium capped decline in aluminium prices while supplies grew and costs of raw materials extended their drops. The most-liquid SHFE May contract stemmed its decline at a low of 13,760 yuan/mt, as shorts took profits and left. It ended at 13,810 yuan/mt, with open interests across all SHFE aluminium contracts up 3,096 lots to 699,000 lots. Shorts accounted for most of the growth in open interests. 

Zinc: Expectations of higher supplies and rising inventories across LME warehouses depressed the SHFE zinc contracts. The most-active SHFE May contract slid sharply below the five-day moving average, to an intraday low of 22,545 yuan/mt in early trades. It recovered part of the losses and closed at 22,740 yuan/mt. Open interests continued to shrink, by 13,790 lots, and this may drive the most-liquid contract to the June contract tonight. We expect the May contract to trade weakly around the 10-day moving average tonight. 

Nickel: The June contract became the most-active SHFE nickel contract. It found support at the five-day moving average after pressure from the 103,000 yuan/mt level lowered it to a low of 101,770 yuan/mt. A weaker US dollar lifted it to a high of 103,310 yuan/mt in the afternoon, before it settled at 103,240 yuan/mt. Open interests grew 12,000 lots as longs entered. As the KDJ indicators expanded upwards and the MACD red line lengthened, the contract is likely to test support at the five-day moving average tonight. 

Lead: The SHFE 1905 contract failed to break its rangebound trend as limited upward momentum lowered it from a high of 16,930 yuan/mt around noon. It closed 0.18% higher on the day at 16,900 yuan/mt with open interests down 1,052 lots to 40,950 lots. A higher LME lead above $2,000/mt is likely to buoy the contract tonight. 

Tin: The SHFE May contract traded around the 60-day moving average with pressure from the five- and 40-day moving averages. Support from the 10-day moving average prevented it from falling to the 147,910 yuan/mt level. It settled at 148,160 yuan/mt, after it rebounded to around 148,600 yuan/mt. Tonight, it will trade with support at 147,500 yuan/mt, and pressure at 149,000 yuan/mt.