SMM Evening Comments (May 27)

SHANGHAI, May 27 (SMM) – SHFE nonferrous metals, except for lead, closed higher on Monday May 27, as nickel led the increase and jumped nearly 3.1%. Tin climbed 1.1%, aluminium advanced 0.9%, copper and zinc rose close to 0.8%, while lead lost 1.1%. 

The ferrous complex ended mostly lower as rebar shed 0.5%, hot-rolled coil slid 0.8%, coking coal eased 1.1%, coke dipped 1.4%, while iron ore increased almost 4.6%. 

Copper: The most-active SHFE July contract consolidated around 47,280 yuan/mt after departing shorts lifted to a high of 47,330 yuan/mt. It ended the trading day 0.81% higher at 47,280 yuan/mt, with open interests down 1,990 lots to 232,000 lots. The KDJ indicators continued their bullish signs from last Friday and the MACD green line shortened. Tonight, the contract may try to stand firm above the 47,300 yuan/mt level.   

Aluminium: The most-traded SHFE July contract rose for the third consecutive trading day as longs entered after news that Shenhuo Group’s primary aluminium plant in Henan province will suspend its full capacity of 250,000 mt after a fire on Sunday evening. Brisk demand lowered stocks of primary aluminium across social warehouses and also bolstered prices. The contract ended 0.9% higher on the day at 14,310 yuan/mt, with open interests up 2,040 lots to 241,000 lots. The capacity suspension is likely to further lift the contract to test pressure from 14,440 yuan/mt tonight. 

Zinc: The most-active SHFE July contract regained losses from early trades as it rebounded at noon, from lows of 20,230 yuan/mt, to end 0.79% higher on the day at 20,360 yuan/mt. Lower social inventories of zinc supported prices, but potential higher stocks on arrivals of shipments will limit upside room in the contract. The July contract is expected to consolidate below the Bolinger lower band tonight. 

Nickel: A departure of shorts kept the most-traded SHFE July contract robust today. It closed the trading day 3.12% higher at 100,660 yuan/mt, after rose to an intraday high of 101,200 yuan/mt. Open interests lost 27,900 mt to 248,000 lots, and caused an outflow of 140 million yuan of capital, topping the base metals. As the MACD red line lengthened, the contract may attempt to hold firm around 100,800 yuan/mt tonight. 

Lead: As shorts accumulated, the most-liquid SHFE July contract fell below the five- and 10- day moving averages to an intraday low of 15,995 yuan/mt in the afternoon, after it hovered around 16,225 yuan/mt since opening. It finished the trading day 1.08% lower at 16,020 yuan/mt, losing nearly all the gains from last week, with open interests up 3,364 lots to 49,738 lots. It will test support from 16,000 yuan/mt tonight. 

Tin: The most-traded SHFE September contract extended its increase from overnight, as it climbed to a high of 145,950 yuan/mt and settled 1.07% higher on the day at 145,550 yuan/mt. As shorts exited, open interests shrank 1,318 lots to 40,082 lots. We see the contract facing resistance from 146,000 yuan/mt tonight.