SMM Evening Comments (Dec 11)

SHANGHAI, Dec 11 (SMM) – SHFE nonferrous metals, except for zinc, rose across the board on Wednesday as hopes of a delay in US tariffs on $160 billion worth of Chinese goods boosted market sentiment. Nickel led the increase and rebounded 2.36%. Copper advanced 0.86%, aluminium gained 0.29%, lead rose 0.6%, tin climbed 0.4%, while zinc eased 0.11%.  

The ferrous complex also traded higher for the most part. Iron ore added 0.53%, rebar increased 0.68%, hot-rolled coil gained 1.52%, stainless steel went up 1.61%, while coke lost 0.36%.

Copper: Trade optimism and eased concerns about global demand following China's higher-than-expected new loans data and stabilised growth in social financing, supported the price rally in copper today. The most-liquid SHFE 2002 contract jumped to more than a seven-month high of 49,060 yuan/mt, and closed 0.86% higher on the day at 49,000 yuan/mt. Longs aggressively loaded up their position, lifting open interest by 18,000 lots to 285,000 lots. With the KDJ indicators expanded upwards and the MACD red line lengthened, the contract may test support from 49,000 yuan/mt tonight.

Aluminium: Short-covering sent the most-traded SHFE 2001 contract above 14,000 yuan/mt, to an intraday high of 14,055 yuan/mt. The contract ended the trading day 0.29% higher on the day at 14,000 yuan/mt, with open interest down 11,022 lots to 171,000 lots. SMM weekly data of aluminium inventories is due on tomorrow, which may point to a continued decline in social stocks as consumption came in better than expected while supply growth slowed. The contract is likely to hover between 13,950-14,050 yuan/mt tonight. 

Zinc: The most-active SHFE 2002 contract failed to continue its rally, after six consecutive sessions of increase, as pressure from the five- and 10- day moving averages weighed prices from an intraday high of 17,940 yuan/mt. The contract finished 0.11% lower on the day at 17,850 yuan/mt. But the decline was capped as refined zinc inventories remained at low levels. Bearish signals from technical indicators may keep the contract weak tonight. 

Nickel: The most-active SHFE 2002 contract held onto gains from overnight as it hovered in a tight band today around 108,000 yuan/mt, hit an intraday high of 108,180 yuan/mt and finished the day 2.36% higher at 107,990 yuan/mt. The K-indicator shrugged off pressure from the 10-day moving average. Tonight, pressure from 108,000 yuan/mt will be monitored. 

Lead: The most-traded SHFE 2001 contract gained for the fifth straight session, as a stronger LME lead buoyed confidence in longs, lifting the contract to an intraday high of 15,225 yuan/mt before it ended up 0.6% on the day at 15,200 yuan/mt. It moved above the 10-day moving average today, with moving averages showing signs of slower decline. Nonetheless, limited improvement in fundamentals should continue to keep investors cautious tonight. 

Tin: The most-active SHFE 2001 contract extended its price rally for the fourth consecutive day, closing up 0.4% at 141,610 yuan/mt. It hit the highest level in nearly three months, at 141,950 yuan/mt. Open interest shrank 54 lots to stand at 22,242 lots. Pressure above is seen from 142,000 yuan/mt tonight.