SMM Evening Comments (Apr 25)

SHANGHAI, Apr 25 (SMM) – SHFE nonferrous metals, except for tin, rebounded and closed higher on Thursday April 25. Lead jumped 0.82%, aluminium advanced 0.6%, zinc grew 0.42%, copper rose 0.41%, and nickel nudged up. 

The ferrous complex ended mostly lower as iron ore lost nearly 1%, hot-rolled coil slid 0.82%, rebar fell 0.56%, coke edged down, while coking coal increased 0.19%. 

Copper: The most-traded SHFE June contract jumped above the 60-day moving average but faced continued pressure from the Bollinger middle band. A buildup of shorts depressed the contact after a higher LME copper bolstered it to a high of 49,350 yuan/mt. It slid to a low of 49,090 yuan/mt and settled at 49,180 yuan/mt, with open interests down 1,576 lots to 189,000 lots. Some 91.89 million yuan of capital left all SHFE copper contracts, topping base metals. The SHFE copper contracts formed a contango structure today, with price spread between May and June contracts at 30 yuan/mt. Downside trends in the MACD indicators are likely to keep the June contract testing support at 49,100 yuan/mt tonight. 

Aluminium: Lower inventories of primary aluminium bolstered the most-active SHFE June contract, as it climbed to a high of 14,270 yuan/mt and ended at 14,240 yuan/mt. Open interests increased 21,000 lots to 337,000 lots as longs entered. As the K-line stood firm at the Bollinger upper band and the MACD red line lengthened, the contract is likely to trade robustly before the Labour Day holiday, and hover between 14,200-14,300 yuan/mt tonight. 

Zinc: Shorts exited and pulled the most-liquid SHFE June contract above the daily moving average, to an intraday high of 21,560 yuan/mt before noon. While departing longs weighed it to a low of 21,370 yuan/mt in the afternoon, a loss of shorts again lifted the contract and settled it at 21,510 yuan/mt. Open interests lost 13,868 lots to 288,000 lots today, while open interests across back-month contracts accumulated. Slow trades and weak premiums of spot zinc are likely to limit the upward momentum, and keep the contract below the five- and 60-day moving averages tonight.

Nickel: The most-liquid SHFE June contract traded within a broad range with an intraday low of 97,110 yuan/mt. As shorts departed, the contact rebounded to close at 97,700 yuan/mt, with open interests down 17,000 lots to 267,000 lots. It is expected to test support at 97,000 yuan/mt as the MACD green line shortened. 

Lead: The most-active SHFE June contract extended its increase from overnight to a high of 16,550 yuan/mt, but pressure from shorts depressed it to 16,430 yuan/mt around noon. As some shorts took profits and left, the contract rebounded above 16,500 yuan/mt and closed at 16,545 yuan/mt. Open interests grew 246 lots to 56,644 lots. Pressure from the 20-day moving average will cap any upside room in the contract, which is expected to hover around 16,500 yuan/mt tonight. 

Tin: Shorts continued to lower the most-traded SHFE September contract and dragged it to a low of 146,860 yuan/mt, before it ended at 147,050 yuan/mt. Open interests expanded 1,448 lots to 32,630 lots. We see it trading with support at 146,500 yuan/mt and resistance at 148,500 yuan/mt tonight.