SMM Evening Comments (Nov 21)

SHANGHAI, Nov 21 (SMM) – SHFE nonferrous metals ended mostly lower on Thursday as a possible delay in a much-awaited phase-one trade deal between Washington and Beijing weighed on sentiment.

Zinc led the losses and fell 1.42%. Copper shed 0.02%, lead eased 0.83%, nickel lost 0.86%, while aluminum gained 0.8%, and tin jumped 2.2%. 

The ferrous complex also fell for the most part as rebar slipped 1.12%, hot-rolled coil fell 1.13%, stainless steel went down 0.31%, coke lost 0.66%, while iron ore gained 0.71%. 

Copper: Concerns about trade uncertainties and worsening global economy pressured the most-liquid SHFE 2001 contract, which finished 0.02% lower on the day at 47,110 yuan/mt. This came after it touching a one-week high on Wednesday. Prospect for global economic growth was dampened after US Federal Reserve officials said risks to the US economy remained elevated as they agreed to put interest rates on hold following their third cut this year. Tonight, pressure above from the 20-day moving average will keep the contract testing support from 47,100 yuan/mt. 

Aluminium: Investors cut their bearish position as a continued decline in social inventories of primary aluminium pointed to healthy downstream demand, lifting the most-active SHFE 2001 contract to a high of 13,870 yuan/mt, before it ending up 0.8% at 13,865 yuan/mt. Cautious short position may see the price difference between front and back month contracts widening tonight. 

Zinc: Loaded-up shorts depressed the most-liquid SHFE 2001 contract below the 18,000 yuan/mt level, to a low of 17,915 yuan/mt, before it trimmed losses to end at 18,060 yuan/mt, down 1.42% on the day. Brisk transactions in the spot market, however, affected morale among shorts. Tonight, the contract is expected to remain rangebound below the Bollinger lower band. 

Nickel: The most-active SHFE 2002 contract remained in a downward trend even as it rebounded from an intraday low of 112,300 yuan/mt and moved above the daily moving average. It ended down 0.86% at 114,010 yuan/mt. Pressure above from several moving averages may cap any upward room in the contract tonight. It is likely to struggle around 114,000 yuan/mt. 

Lead: Downbeat market sentiment weighed the most-liquid SHFE 2001 contract to an intraday low of 15,390 yuan/mt, before it pared some losses to end down 0.83% at 15,550 yuan/mt, as the price gap between primary and secondary lead further narrowed and spot premiums rose. The rebound in prices will be limited given overall weak consumption at the year-end and an underperformed LME lead. 

Tin: The most-traded SHFE 2001 contract rose to end 2.2% higher at 137,740 yuan/mt as short aggressively cut their position and spot supplies tightened. The contract has regained losses since November 12 and may continue to see open interest lower in the days ahead. Arbitrage opportunities drove longs to enter the SHFE 2005 contract today. Investors should remain cautious about prices pulling back after the rally. Pressure above is seen at 139,000 yuan/mt tonight with support from 136,000-136,500 yuan/mt.