Metals News
SMM Evening Comments (Jan 7): Copper advanced on an absence of escalation in Middle East tensions
price review forecast
06:18PM
Jan 7,2020
Source:SMM

SHANGHAI, Jan 7 (SMM) – SHFE nonferrous metals, except for aluminium, ended higher across the board on Tuesday. Zinc was the best performer, closing up 1.45%. Copper advanced 0.41%, lead rose 0.85%, nickel climbed 1.21%, and tin increased 0.43%. 

The ferrous complex extended their increases as iron ore rose 0.3%, rebar grew 0.7%, hot-rolled coil added 0.5%, stainless steel gained 0.69%, and coke increased 0.96%.

Copper: Shanghai copper rose on Tuesday, recovering losses from the previous sessions, as a lack of immediate escalation between the US and Iran dented investors’ safe-haven demand. The most-traded SHFE 2003 contract hit an intraday high above 49,000 yuan/mt, before closed up 0.41% on the day at 49,010 yuan/mt. Open interest rose 6,467 lots to 119,000 lots with a buildup of the long position. Gold prices came off from a nearly seven-year high on the back of eased US-Iran tensions. This, coupled with an upbeat investor confident index from the eurozone and service sector data from the UK, was also supportive of copper prices. Mixed technical signals may see the SHFE contract track its LME counterpart and test support from 49,000 yuan/mt tonight. 

Aluminium: The most-active SHFE 2002 contract declined after marginal increases for several consecutive sessions. It trimmed some losses after slipped to an intra-day low of 14,035 yuan/mt, ending 0.21% lower on the day at 14,070 yuan/mt. A softened US dollar and an elevated LME aluminium remained supportive of Shanghai aluminium. Social inventories of primary aluminium may unlikely rise significantly this week despite weakened downstream demand pre-holiday. SMM sees the contract staying at high levels in the short term. 

Zinc: Shanghai zinc gained for the second consecutive session after a rise of 2.23% in the prior day, as risk aversion sentiment eased after there was no further escalation in Middle East tensions. The most-liquid SHFE 2003 contract finished 1.45% higher on the day at 18,175 yuan/mt. Open interest added 465 lots to 88,973 lots with longs loading up their position. Further upward momentum will likely see the contract testing pressure from the Bollinger upper band tonight.

Nickel: The most-traded SHFE 2003 contract regained losses from last Friday and shrugged off pressure from the daily moving average, ending 1.21% higher on the day at 109,390 yuan/mt. Weak fundamentals, however, are expected to cap its upsides in the near term. While support is seen from 107,000 yuan/mt, pressure above from the five-day moving average will be monitored tonight. 

Lead: The most-active SHFE 2002 contract extended its price rally for the second straight day as it hovered around the daily moving average and ended 0.85% higher on the day at 14,820 yuan/mt. A robust LME lead during the European trading hours may continue to pull the SHFE contract above the five-day moving average, but investors should remain cautious about loading up bullish position. 

Tin: The most-traded SHFE 2006 contract inched higher on the day to finish at 135,120 yuan/mt, recovering decline from the previous day. Pressure above is seen from the 10-day moving average, or 135,800 yuan/mt tonight. 

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