Metals News
SMM Evening Comments (May 7)
price review forecast
May 7,2019

SHANGHAI, May 7 (SMM) – Most SHFE nonferrous metals closed higher on Tuesday. Copper rose 0.9%, nickel climbed close to 0.8%, zinc advanced 0.4% and tin gained 0.2% while aluminium dipped 0.04% and lead fell close to 0.4%.

The ferrous complex traded higher across the board. Coke increased by 3.3%, iron ore rose 2.9%, coking coal crept up over 1%, hot-rolled coil gained close to 0.4% and rebar advanced 0.2%.

Copper: The most traded SHFE June contract traded rangebound during the day, and held onto overnight gains to finish the trading day 0.94% higher at 48,290 yuan/mt. The unwinding of short positions primarily accounted for today’s gains. Price spread between the June and July contracts flipped into a 10 yuan/mt backwardation. SHFE copper has broken the lower Bollinger band, with KDJ lines crossing to show bullish signals. The contract is expected to try to stand above 48,400 yuan/mt tonight.

Aluminium: As shorts cut their positions, the most active SHFE June contract climbed to an intraday high of 14,035 yuan/mt in early morning trade before it fluctuated to end at 14,010 yuan/mt. Open interest for the contract shrank 12,256 lots to 235,478 lots, with short-covering accounting for the majority. SHFE aluminium has pared some of Monday’s sharp losses and is expected to rise to test the five-day moving average tonight.

Zinc: The buildup of long positions bolstered the most liquid SHFE July contract to an intraday high of 21,460 yuan/mt in early morning trade before the contract pared some gains to end the trading day 0.38% higher at 21,375 yuan/mt. Zinc consumption failed to see significant improvement after the holiday, and this kept spot premiums in check. SHFE zinc also faces pressure from moving averages. Weighed by a lower LME counterpart, SHFE zinc is likely to trade below the 10-day moving average tonight.

Nickel: The most traded SHFE July contract fluctuated and extended overnight gains to finish the trading day 0.75% higher at 96,300 yuan/mt. Pressure was at 96,500 yuan/mt. It tonight is expected to try to stand firmly above the 96,000 yuan/mt level and pare the losses from Monday’s lower open.

Lead: The most active SHFE June contract remained rangebound with pressure from 16,400 yuan/mt and support from 16,350 yuan/mt during the day. It failed to recover from overnight losses and ended the trading day 0.37% lower at 16,365 yuan/mt. Poor margins across secondary lead smelters deterred shorts from adding positions, while macro uncertainty prevented longs from entering the market. SHFE lead might try to recover, but faces strong pressure.

Tin: As shorts added their positions, the most traded SHFE September contract fell during the day, giving up much of overnight gains to close the trading day 0.22% higher at 147,400 yuan/mt. Support is seen at 146,000 yuan/mt while resistance is at 149,000 yuan/mt.

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