SMM Evening Comments (Nov 6)

SHANGHAI, Nov 6 (SMM) – SHFE nonferrous metals, except for copper and aluminum, closed lower on Wednesday. Lead led the losses with a 1.5% decline, zinc dropped 1.4%, nickel shed 1.2%, and tin dipped 0.03%.

The ferrous complex, however, traded mostly higher. Rebar rose 1.3%, hot-rolled coil advanced 1%, iron ore gained 0.7%, and stainless steel inched up 0.03%, while coke edged down 0.1% and coking coal slipped 0.2%.

Copper: The most active SHFE 1912 contract eased during the daytime session, on resurfacing demand concerns fuelled by a larger-than-expected buildup in US crude stocks. It finished the trading day marginally higher at 47,190 yuan/mt, after seeing a one-week high of 47,630 yuan/mt in overnight trade. We still see upside potential in SHFE copper, in view of US-China trade developments, upbeat PMIs from China and the US. The contract is likely to try to break 47,300 yuan/mt tonight.

Aluminium: The most traded SHFE 1912 contract climbed to a one-month high 13,985 yuan/mt in afternoon trade, before it gave back all those gains to close flat at 13,955 yuan/mt, snapping a five-day winning streak. This pointed to weak morale among longs when prices rose towards the 140,000 yuan/mt level. We see limited further upside in SHFE aluminium.  

Zinc: The most active SHFE 1912 contract saw its losses accelerating in afternoon trade, falling below the 60-day moving average to end down 1.39% at 18,740 yuan/mt, lows in a week. Brisk spot trades are likely to offer some support to SHFE zinc, and strength at the 60-day moving average will be closely watched tonight.

Nickel: The SHFE 1912 contract eased during the daytime session, and ended down 1.17% at 130,320 yuan/mt, near session-lows of 130,220 yuan/mt, the weakest in one week and a half. SHFE nickel now faces resistance from several moving averages, but sees no levels that can offer support. Whether it could remain above 130,000 yuan/mt will come under scrutiny tonight.  

Lead: The most active SHFE 1912 contract plumbed a four-month low of 16,060 yuan/mt in afternoon trade, before it recouped some losses to finish the day 1.52% lower at 16,155 yuan/mt. SHFE lead is likely to extend its decline, in view of its weak fundamentals and falling LME counterpart.

Tin: The most traded SHFE 2001 contract slipped to its lowest in nearly four weeks at 136,020 yuan/mt in morning trade, before it clawed back some losses to close a tad weaker at 136,600 yuan/mt. It was supported by the 60-day moving average at 136,000 yuan/mt, but pressured by the five-day one.