SMM Evening Comments (Jan 10): Copper rose on bullish outlook for US non-farm payrolls

SHANGHAI, Jan 10 (SMM) – SHFE nonferrous metals, except for zinc, closed higher on Friday, with nickel leading the gains and ending up 1.07%. 

Copper rose 0.06%, aluminium climbed 0.5%, lead added 0.23%, tin increased 0.81%, while zinc slipped 0.41%. 

The ferrous complex fell for the most part. Iron ore lost 1.2%, rebar slipped 0.45%, hot-rolled coil fell 0.53%, coke shed 0.61%, while stainless steel gained 0.46%. 

Copper: Shanghai copper rose on Friday as optimistic prospects for US non-farm payrolls and the signing of the US-China trade deal supported the rebound in risk appetite. The most-active SHFE 2003 contract returned above 49,000 yuan/mt and closed up 0.06% on the day at 49,010 yuan/mt. Open interest added 6,243 lots to 135,000 lots. China confirmed that it would sign a preliminary trade deal with the United States next week. This grew expectations of stronger Chinese demand and buoyed copper prices. Currently firm above the five-day moving average, the contract is expected to test support from 49,000 yuan/mt tonight. 

Zinc: The most-traded SHFE 2003 contract retreated for the second consecutive day, as departing longs sent it 0.41% lower on the day to finish at 18,340 yuan/mt. Support remained from the five- and 60- day moving averages. Open interest lost 272 lots to 103,000 lots as investors cut their long position. The KDJ indicators expanded downwards, indicating some downside risk in prices. The market focus will shift to the US non-farm payrolls report tonight. 

Nickel: The most-liquid SHFE 2003 contract continued to lead the increase among base metals, as it breached the daily moving average to hit a high of 112,110 yuan/mt, before ending up 1.07% on the day at 111,930 yuan/mt. This marked the fifth consecutive day of a price rally. Pressure above from 112,000 yuan/mt will be monitored tonight.

Lead: The SHFE 2002 contract hovered rangebound around the daily moving average, ending 0.23% higher on the day at 14,975 yuan/mt, recovering losses from the previous session. Continued pressure from 15,000 yuan/mt, coupled with holiday-thinned downstream demand, will cap upward momentum in prices next week. 

Tin: The most-traded SHFE 2006 contract rebounded after it trimmed overnight gains to hit a low of 137,150 yuan/mt. It ended 0.81% higher on the day at 137,550 yuan/mt, extending increase from the prior sessions. Resistance is seen from the 20-day moving average, or 138,800 yuan/mt tonight.