SMM Evening Comments (Nov 12)

SHANGHAI, Nov 12 (SMM) – SHFE nonferrous metals closed mixed on Tuesday, with nickel being the worst performer and losing 2.5%. Aluminium shed 1.1%, and tin fell 0.8%, while copper was marginally higher, lead edged up 0.06% and zinc advanced 1.1%.

The ferrous complex mostly rallied after Beijing issued its guidance for smog control across the Fenwei Plain and the Yangtze River Delta in the coming winter.

Iron ore led the gains with a 2.5% increase. Rebar climbed 2.4%, hot-rolled coil rose 1.8%, and coke inched up 0.1%, while coking coal closed a tad lower and stainless steel slipped 0.1%.

Copper: Tracking gains in oil prices, the SHFE 2001 contract climbed during the daytime session, recovering from overnight losses to an intraday high of 47,330 yuan/mt before it eased to close a tad higher at 47,270 yuan/mt. SHFE copper has yet to shrug off resistance at the 10-day moving average, with an extended MACD green bar. Whether it could hold to the 47,200 yuan/mt handle will come under scrutiny, and investors will also monitor European economic data slated for release tonight.  

Aluminium: As longs trimmed their positions, the SHFE 1912 contract fell to its lowest in more than a week at 13,810 yuan/mt in morning trade, before it traded rangebound to end the trading day 1.07% lower at 13,815 yuan/mt. Dampened trade hopes and smaller declines in inventories prompted bullish investors to exit, while bears moved to later-dated contracts ahead of the November delivery. SHFE aluminium is expected to remain weak tonight, nearing 13,700 yuan/mt ahead of the delivery.

Zinc: As shorts covered their positions, the SHFE 2001 contract climbed during the daytime session, extending overnight gains to close up 1.13% higher at an intraday high of 18,805 yuan/mt. SMM data showed that social inventories of refined zinc across Shanghai, Tianjin and Guangdong rose 1,100 mt over the weekend, pointing to weakening consumption from a high season. Shrinking open interest for the contract suggested limited confidence among longs, on expectations of a sustained rebound in inventories. Resistance at the moving averages and support at the lower Bollinger band will come under scrutiny tonight. 

Nickel: The SHFE 2002 contract fell as much as 3.5% to a low of 120,500 yuan/mt, before closing down 2.49% at 121,750 yuan/mt. Whether it could remain above the lower Bollinger band as low as 121,000 yuan/mt will be closely watched tonight.

Lead: The SHFE 1912 contract rose after plumbing a four-month low of 15,780 yuan/mt in early morning trade, as shorts took profits after the discount of secondary lead against primary materials narrowed. It finished the trading marginally higher at 16,025 yuan/mt, taking a breather in a downtrend that began at the end of October. SHFE lead is expected to continue to waver around 16,000 yuan/mt tonight, in view of eased pessimism around fundamentals and a weaker LME counterpart.

Tin: The SHFE 2001 contract slipped to an intraday low of 136,100 yuan/mt in morning trade, before it recovered some ground to close down 0.83% at 136,330 yuan/mt. Immediate support is seen at the 60-day moving average at 136,000 yuan/mt.