SMM Evening Comments (May 20)

SHANGHAI, May 20 (SMM) – SHFE nonferrous metals closed lower across the board on Monday, with the biggest loss of 2% in zinc. Lead fell 0.9%, nickel declined close to 0.8%, copper and aluminium lost about 0.5%, and tin dipped 0.1%.

The ferrous complex, except for hot-rolled coil, traded higher on the day. Iron ore climbed 2.3%, coke advanced close to 0.95%, coking coal rose 0.4% and rebar gained 0.2%.

Copper: As longs cut their positions, the most active SHFE July contract fell during the day, extending Friday night loss to end 0.54% lower at 47,620 yuan/mt. The contract has declined for two consecutive trading days, and failed to hold onto the five-day moving average. The market tonight is likely to look for clues from the London market, with the strength of the 47,600 yuan/mt level in focus.

Aluminium: The most traded SHFE July contract traded rangebound during the day, failing to recover from Friday night’s decline, and closed the trading day 0.49% lower 14,285 yuan/mt. It hovered around the five-day moving average. Open interest for the contract expanded 2,614 lots on the day to 260,618 lots, and the buildup of short positions accounted for the majority. The contract is expected to continue its rangebound pattern tonight, with most transactions occurring at 14,150-14,400 yuan/mt.

Zinc: The most active SHFE July contract extended Friday night’s loss to finish the trading day 2% lower at 20,615 yuan/mt. Open interest for the contract expanded 22,128 lots on the day to 365,172 lots, with the buildup of short positions accounting for the majority. SMM data showed that social inventories of refined zinc across Shanghai, Tianjin and Guangdong gained over the weekend. We see little upward momentum in SHFE zinc, and the contract is expected to hover around the five-day moving average tonight.

Nickel: With pressure from the daily moving average, the most traded SHFE July contract declined during the day, and ended 0.77% lower at 97,330 yuan/mt. A total of 153 million yuan flowed into the SHFE nickel complex on the day, marking the most among nonferrous metals. Its KDJ lines converged, with an extended MACD red bar. The contract is expected to try to hang on above the five-day moving average tonight.

Lead: As longs covered their positions for risk aversion, the most active SHFE June contract saw its declines accelerate in the final trading hour before closing bell, and ended 0.89% lower at 16,080 yuan/mt. SHFE lead is expected to trade rangebound in the near term as support is seen strong at 16,000 yuan/mt, while continued weakness in consumption and macro developments weigh.

Tin: The most traded SHFE September contract dropped to a low of 145,020 yuan/mt before the loading up of long positions helped it recover to close at 145,540 yuan/mt, down 0.12% on the day. SHFE tin hovered at lows, with the intraday high standing above the five-day moving average. Support is seen at 145,000 yuan/mt, while resistance is at 147,000 yuan/mt.