SMM Evening Comments (Jan 15): Caution over US-China trade deal capped copper increase

Published: Jan 15, 2020 19:05 (GMT+8)

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SHFE nonferrous metals, except for nickel, closed higher on Wednesday, with lead leading the increase and adding 1.88%

SHANGHAI, Jan 15 (SMM) – SHFE nonferrous metals, except for nickel, closed higher on Wednesday, with lead leading the increase and adding 1.88%.

The rise in copper was capped on the back of continued concerns about US-China trade as an initial deal may not remove US tariffs on China.

U.S. Treasury Secretary Steven Mnuchin said tariffs will remain after a Phase One trade deal signing later on Wednesday, but President Donald Trump could consider easing them if China moves to seal a second agreement.

Copper advanced 0.16%, aluminium gained 0.14%, lead increased 1.88%, zinc climbed 0.22%, tin rose 1.04%, while nickel shed 1.91%.

The ferrous complex mostly fell as iron ore declined 0.3%, rebar eased 0.25%, stainless steel fell 0.65%, coke fell 0.27%, while hot-rolled coil edged higher.

Copper: The most-traded SHFE 2003 contract trimmed overnight gains and slipped to an intraday low of 49,180 yuan/mt, before ending 0.16% higher on the day at 49,260 yuan/mt. Investors remained cautious about the US-China trade deal with sentiment somewhat dented by comments from the US Treasury Secretary that tariffs would remain in place for now. Technical indicators suggested some downward pressure tonight. The contract is expected to test support from 49,200 yuan/mt tonight. The SHFE 2001 contract finished its last trading day with a settlement price of 49,020 yuan/mt and delivery volumes of 14,950 mt.

Aluminium: The most-traded SHFE 2003 contract regained losses from the previous two days as loaded-up long positions pull it up above the 20-day moving average to a high of 13,990 yuan/mt, before it finished 0.14% higher on the day at 13,970 yuan/mt. The SHFE 2001 contract once hit its daily limit as shorts covered their positions before delivery of the contract. The SHFE 2001 contract closed 1.59% higher on the day at 14,700 yuan/mt, with a settlement price of 14,630 yuan/mt. Demand weakened amid muted trades pre-holiday and inventories of aluminium ingot built up as producers shifted to ingot production on reduced demand for molten aluminium. Elevated stocks are expected to keep aluminium prices weak before the holiday.

Zinc: The most-liquid SHFE 2003 contract ended its four consecutive sessions of decline with a rally of 0.22%, ending at 18,235 yuan/mt after hitting a high of 18,245 yuan/mt. Holiday-thinned demand from the downstream sectors will likely cap any upward room in prices tonight. The SHFE 2001 contract was delivered today with a settlement price of 18,165 yuan/mt and delivery volumes of 12,300 mt.

Nickel: The most-liquid SHFE 2003 contract extended its decline with pressure from the daily moving average, closing 1.91% lower on the day at 109,140 yuan/mt. It is estimated to continue to test pressure from 110,000 yuan/mt tonight. The SHFE 2001 contract was delivered with a settlement price of 108,020 yuan/mt and delivery volumes of 4,670 mt today.

Lead: The most-traded SHFE 2003 contract followed its LME counterpart higher and gained 1.88% on the day to close at 15,140 yuan/mt. Pressure remained from the 10-day moving average. This, coupled with current weak fundamentals, may unlikely to sustain the price rally in the near term. The SHFE 2001 contract ended its last trading day with a settlement price of 14,965 yuan/mt and delivery volumes of 3,270 mt.

Tin: The most-traded SHFE 2006 contract advanced as investors cut their bearish positions and added bullish positions. The contract climbed to an intraday high of 139,900 yuan/mt and closed up 1.04% at 139,660 yuan/mt. Pressure is seen from 140,500 yuan/mt tonight.

Evening comments Futures movement

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