SMM Evening Comments (Jan 9): Base metals rose as US-Iran tensions appeared to ease

SHANGHAI, Jan 9 (SMM) – SHFE nonferrous metals traded mostly higher on Thursday, with nickel leading the gains and ending up 2.54%. Investors’ risk aversion eased on signs that Iran and the US were keen to de-escalate the Middle East standoff.

Copper climbed 0.31%, lead added 0.4%, tin increased 1.55%, while aluminium shed 0.11%, and zinc lost 0.29%. 

The ferrous complex fell after previous consecutive sessions of increase. Iron ore dropped 2.95%, rebar slipped 1.3%, hot-rolled coil dipped 1.16%, stainless steel lost 0.43%, and coke eased 1.42%. 

Copper: Shanghai copper advanced on Thursday after US President Donald Trump’s comments on the Iran conflict relieved investor worries about further escalation of geopolitical risks in the Middle East. The most-traded SHFE 2003 contract regained losses from the previous day as it recovered to around the daily moving average. Limited upward momentum ended it at 48,960 yuan/mt, up 0.31% on the day. Open interest added 5,907 lots to 128,000 lots as longs added their position. Traditional safe-haven assets gold ended its 11 straight days of increase, falling below $1,600/oz to $1,540/oz. The SHFE contract has held firm above the five-day moving average, and eased technical pressure may see it testing support from 48,900 yuan/mt tonight.  

Aluminium: The most-traded SHFE 2003 contract retreated on Thursday as it relinquished gains from the early session and ended 0.29% lower on the day at 13,990 yuan/mt, losing gains from the previous three days. Open interest shrank 505 lots to 103,000 lots as investors cut long position. The price spread between the SHFE 2001 and 2002 contracts continued to widen, to around 370 yuan/mt. Price range of the contract is seen between 13,970-14,100 yuan/mt tonight. 

Zinc: The most-liquid SHFE 2003 contract pulled back after three consecutive days of increase, closing down 0.11% at 18,345 yuan/mt. Support remained from the 60-day moving average. The KDJ indicators expanding downwards, indicating some downward risk. This, coupled with uncertainties around US-Iran tensions, will expand downsides of the contract tonight and keep it testing support from the 60-day moving average.  

Nickel: The most-traded SHFE 2003 contract regained losses from last Friday and returned above the 111,800 yuan/mt level, as aggressively loaded-up longs sent it to a high of 111,890 yuan/mt, before it ended up 2.54% on the day at 111,540 yuan/mt. Open interest increased 10,097 lots to 166,877 lots. Pressure above from 112,000 yuan/mt will be monitored tonight. 

Lead: The most-active SHFE 2002 contract faced heavy pressure from 15,000 yuan/mt, as it failed to exceed 15,015 yuan/mt and slid to a low of 14,880 yuan/mt, still ending 0.4% higher on the day at 14,925 yuan/mt. Tight supply of primary lead and moderate pre-holiday restocking from downstream battery producers helped support lead prices, but near-term prices will likely pull back as consumers halt purchases on logistics suspension around the holiday.  

Tin: The most-traded SHFE 2006 contract rose on short-covering, climbing to an intraday high of 137,770 yuan/mt and retreated slightly to close at 137,720 yuan/mt, up 1.55% on the day. With support from the five- and 10- day moving averages, the contract is expected to test resistance from 139,200 yuan/mt tonight.