SMM Evening Comments (Nov 7)

SHANGHAI, Nov 7 (SMM) – SHFE nonferrous metals closed mixed on Thursday. Zinc dropped 1.4%, lead fell close to 1%, and copper shed 0.5%, while aluminium rose 0.2%, tin gained 0.3%, and nickel advanced 0.6%.

The ferrous complex, except for stainless steel, traded lower. Iron ore led the losses with a 2.2% tumble, hot-rolled coil slid 0.9%, coke and rebar decreased 0.8%, and coking coal lost 0.3%.

Tonight, the markets are likely to cheer the latest developments on the US-China trade front. China’s commerce ministry said Thursday that Washington and Beijing had over the past two weeks agreed to a phased removal of duties on billions of dollars’ worth of each other’s goods.

Copper: The most active SHFE 1912 contract extended overnight losses to an intraday low of 47,060 yuan/mt in early morning trade, before it recouped some losses to end down 0.46% at 47,150 yuan/mt. Upbeat economic data released recently helped copper prices today, which are likely to extend the rally tonight on the positive US-China trade developments. With support at the five-day moving average, SHFE copper is likely to try to break 47,330 yuan/mt.

Aluminium: The most traded SHFE 1912 contract recovered from earlier losses to close 0.18% higher at 13,980 yuan/mt, as recent gains in prices drove shorts to trim positions. It has yet to shrug off resistance at the 40-day moving average, and saw a wider discount of over 200 yuan/mt against the 1911 contract.

Zinc: The most active SHFE 1912 contract held in a tight range around the daily moving average during the day, failing to recover from overnight losses and ending down 1.4% at 18,670 yuan/mt. The buildup of short positions primarily accounted for today’s losses in SHFE zinc. Gains in LME zinc and US-China trade developments are likely bolster SHFE zinc tonight, which will test resistance at the 60-day moving average.

Nickel: The SHFE 1912 contract jumped to an intraday high of 133,990 yuan/mt in early morning trade, after plumbing a two-week low of 129,470 yuan/mt overnight. It later eased to finish the trading day 0.57% higher at 131,580 yuan/mt. Whether SHFE nickel could remain above 131,000 yuan/mt will come under scrutiny tonight.

Lead: The most active SHFE 1912 contract traded rangebound below the daily moving average during the day, and closed down 0.95% at 16,090 yuan/mt. SHFE lead has fallen for six consecutive trading days, and is likely to temporarily rally tonight given the US-China trade optimism, albeit with limited upside potential.   

Tin: The most traded SHFE 2001 contract climbed to an intraday high of 137,480 yuan/mt in the morning, before it pared some gains to close 0.32% firmer at 136,940 yuan/mt. Resistance is seen at the 10-day moving average at 137,700 yuan/mt.