SMM Evening Comments (Dec 4)

SHANGHAI, Dec 4 (SMM) – SHFE nonferrous metals closed mixed on Wednesday, and nickel remained the laggard, plunging 3.95%. Copper shed 0.25%, lead eased 0.63%, while aluminium gained 0.14%, zinc added 0.42%, and tin climbed 0.32%. 

The ferrous complex also traded on a mixed note as iron ore rose 1.77%, hot-rolled coil grew 0.22%, coke went up 0.78%, while rebar lost 0.44%, and stainless steel fell 1.11%. 

Copper: Shanghai copper stayed at lows and ended lower on Wednesday as the markets shuddered after US President Donald Trump warned the trade war with China could go beyond 2020 election. The most-active SHFE 2001 contract hovered in a tight band, closing down 0.25% on the day at 46,980 yuan/mt. Supply-side concerns continued to weigh on sentiment and cap the increase in oil prices, and this also kept prices of copper under pressure. The market and investors focus on the meeting of the OPEC and its allies on Thursday. Tonight, the SHFE copper contract is expected to test support from 46,900 yuan/mt as it has lost support from all moving averages and the technical indicators turned bearish. 

Aluminium: The most-liquid SHFE 2001 contract regained early losses as it rebounded from an intraday low of 13,905 yuan/mt, finishing 0.14% higher on the day at 13,970 yuan/mt amid short-covering. The changes in domestic social inventories of primary aluminium will continue to determine near-term prices. 

Zinc: The most-liquid SHFE 2001 contract gained for the second consecutive day, supported by domestic low inventories of refined zinc and better-than-expected spot trades. The contract closed 0.42% higher on the day at 17,840 yuan/mt. It is expected to move rangebound and test support from the daily moving average tonight. 

Nickel: The most-active SHFE 2002 contract fell with pressure from 108,000 yuan/mt. It dipped to the lowest level since July 10 at 103,360 yuan/mt, and finished at 104,020 yuan/mt, down 3.95% on the day. It moved close to the Bollinger lower band today and may struggle above 103,000 yuan/mt tonight. 

Lead: The most-active SHFE 2001 contract showed limited signs of slower decline, hovering below the daily moving average today and ending down 0.63% at 15,025 yuan/mt. The contract will receive some support below as its LME counterpart stemmed decline during the European trading session. Costs at domestic secondary lead producers will also underpin prices. Downside room in the contract will be capped tonight. 

Tin: The most-active SHFE 2001 contract remained in a rangebound trend as it recovered from an intraday low of 138,430 yuan/mt and returned above the daily moving average, ending up 0.32% on the day at 138,940 yuan/mt. Pressure above is seen from 139,500 yuan/mt tonight.