SMM Evening Comments (Nov 25)

SHANGHAI, Nov 25 (SMM) – SHFE nonferrous metals traded mixed on Monday, with copper leading the gains and ending up 0.43%. Lead rose 0.29%, tin advanced 0.27%, while aluminium lost 0.25%, zinc slipped 0.14%, and nickel shed 0.07%. 

The ferrous complex, meanwhile, went higher as coke led the increase and jumped 5.17% on the back of reported closure of 14 coke plants in Tangshan. Iron ore climbed 3.34%, rebar grew 1.51%, hot-rolled coil rose 1.56%, and stainless steel added 0.28%. 

Copper: Upbeat US factory data from last Friday and rekindled hope of a US-China trade deal buoyed the most-traded SHFE 2001 contract to an intraday high of 47,170 yuan/mt, before the contract ending up 0.43% at 47,100 yuan/mt. As resistance remained from the 20-day moving average and technical indicators also suggested pressure above, the contract may track its LME counterpart and test support from 47,100 yuan/mt tonight. 

Aluminium: Reduction in social inventories of primary aluminium failed to sustain morale in longs, as the most-traded SHFE 2001 contract fell sharply below the 40-day moving average from an intraday high of 13,875 yuan/mt, closing down 0.25% at 13,805 yuan/mt. Limited clarity around fundamentals may likely keep the contract between the 10-day moving average and five-/20- day moving averages tonight. 

Zinc: Confidence in bearish position weakened as SMM data pointed to a continued decline in zinc social inventories over the weekend. With support from the Bollinger lower band, the most-traded SHFE 2001 contract moved to a high of 18,120 yuan/mt, and closed 0.14% lower on the day at 18,035 yuan/mt. Open interest lost 8,502 lots to 241,000 lots as shorts exited. Intensified backwardation is likely to see the contract testing pressure from the five-day moving average tonight. 

Nickel: The most-liquid SHFE 2002 contract stabilised after falling in the previous weeks, closing slightly lower on the day at 114,060 yuan/mt, with an intraday high of 115,800 yuan/mt. Tonight, pressure above from the five-day moving average or 114,000 yuan/mt should be monitored. 

Lead: The most-traded SHFE 2001 contract stemmed two straight sessions of decline, jumping to an intraday high of 15,640 yuan/mt and ended 0.29% higher at 15,560 yuan/mt. Little development in fundamentals will likely see the contract at lows with limited upward momentum tonight. 

Tin: The most-active SHFE 2001 contract stayed at highs above the daily moving average, around 138,800 yuan/mt, and finished 0.12% lower on the day at 138,880 yuan/mt. Both long and short positions departed, lowering open interest by 1,182 lots to 27,328 lots. The contract will trade with resistance from 139,500 yuan/mt and support from 137,000 yuan/mt tonight.