SMM Evening Comments (Dec 13)

SHANGHAI, Dec 13 (SMM) – SHFE nonferrous metals closed mixed on Friday, with nickel as the best performer, adding 1.05% on the day. Aluminium grew 0.29%, zinc increased 0.78%, while copper eased 0.31%, lead fell 0.13%, and tin slipped 0.87%. 

The ferrous complex mostly fell as rebar lost 0.28%, hot-rolled coil declined 0.67%, stainless steel shed 0.24%, coke dropped 0.4%, while iron ore climbed 0.31%. 

Copper: Shanghai copper stayed at highs despite moderation, as the results of Britain’s election and hopes of a phased trade deal between China and the US boosted global risk appetite and weighed on the US dollar index. The most-liquid SHFE 2002 contract regained overnight losses and moved to an intraday high of 49,380 yuan/mt, before it trimmed the gains to end 0.31% lower on the day at 49,010 yuan/mt. The continued contango structure indicated bullish prospects for long-term prices. Tonight, the contract is expected to track its LME counterpart and test support from 49,000 yuan/mt. 

Aluminium: Improved macroeconomic sentiment drove longs to enter, lifting the most-traded SHFE 2002 contract above the daily moving average to an intraday high of 13,950 yuan/mt. It finished the session 0.29% higher on the day at 13,945 yuan/mt, nearly above all moving averages. As the KDJ indicators expanded upwards and the MACD red line lengthened, the contract will likely remain robust tonight. 

Zinc: The most-traded SHFE 2002 contract increased for the second straight day amid optimism around de-escalation in US-China trade war. The contract found support from the five- and 20- day moving averages, closing up 0.78% on the day at 18,100 yuan/mt, with continued pressure from the Bollinger middle band. A softened US dollar and reduced inventories of refined zinc in China will offer some upward momentum and see the contract testing pressure from the Bollinger middle band tonight. 

Nickel: Short-covering continued to fuel a price rally of nickel, as the most-liquid SHFE 2002 contract hit an intraday high of 111,000 yuan/mt and ended higher for the fourth consecutive day at 110,970 yuan/mt, up 1.05% on the day. Open interest shrank 12,000 lots to 339,000 lots. Pressure from 113,000 yuan/mt will be monitored tonight. 

Lead: Pressure from the 20-day moving average prevented the most-active SHFE 2001 contract from exceeding 15,330 yuan/mt. The contract halted its six consecutive days of increase with a drop of 0.13%, ending at 15,255 yuan/mt. Support remained from the five-day moving average. A weekly buildup of 9,000 mt in lead inventories across SHFE-listed warehouses, together with narrower price spread between primary and secondary lead, will unlikely to see the contract moving above the 20-day moving average tonight.