SMM Evening Comments (May 8)

SHANGHAI, May 8 (SMM) – Most SHFE nonferrous metals closed lower on Wednesday. Zinc saw the biggest loss of 1.7%, copper dropped 0.9%, tin fell close to 0.5% and lead sank some 0.1%, while nickel gained close to 0.2% and aluminium rose 0.4%.

The ferrous complex, except for coke, traded lower. Hot-rolled coil tumbled 1.5%, rebar slid 1.4%, iron ore declined close to 1.2% and coking coal slipped 0.2%.

Copper: Bolstered by gains in LME copper, the most active SHFE June contract climbed above the daily moving average as high as 47,940 yuan/mt shortly after morning opening bell. With shorts adding their positions, SHFE copper relinquished those gains to end the trading day 0.93% lower at 47,840 yuan/mt, falling below the lower Bollinger band. The contract is expected to try to hang on above 47,800 yuan/mt tonight.

Aluminium: The most traded SHFE June contract broke the 20-day moving average to end the trading day 0.39% higher at 14,045 yuan/mt. Open interest for the contract shrank 4,678 lots to 230,800 lots, with the unwinding of short positions accounting for the majority. The contract is expected to continue to recover from Monday’s drop tonight.

Zinc: The most active SHFE July contract dropped below the 21,000 yuan/mt level to close the trading day 1.73% lower 20,970 yuan/mt, as negative macro developments and growing concerns about greater production drove traders to aggressively load up short positions. Open interest for the contract gained 27,016 lots on the day. With strong technical resistance, the contract is likely to struggle to rebound and might trade rangebound around 21,000 yuan/mt tonight.

Nickel: Short-covering shortly before closing helped the most liquid SHFE July contract recover from earlier losses to close the trading day 0.17% higher at 96,180 yuan/mt. Its KDJ lines diverged and expanded upwards with a shortened MACD green bar. The contract is likely to attempt to remain above 96,000 yuan/mt tonight.

Lead: With shorts and longs diverging at the 16,350 yuan/mt level, the most traded SHFE June contract continued to fluctuate and finished the trading day 0.09% lower at 16,355 yuan/mt. It is difficult to see a direction amid uncertainties surrounding US-China trade talks. The contract is expected to remain rangebound at lows tonight.

Tin: The most active SHFE September contract closed the trading day 0.45% lower at 147,200 yuan/mt after it gave up all the gains seen in early morning trade. With pressure from the five- and 10-day moving averages, the contract is expected to remain rangebound in the short run, with support at 146,000 yuan/mt and resistance at 148,500 yuan/mt.