SMM Evening Comments (Jan 16): Metals mostly higher after US-China phased trade deal signing 

SHANGHAI, Jan 16 (SMM) – SHFE nonferrous metals, except for copper, ended higher on Thursday, after the US and China signed a phased trade deal that would roll back some tariffs and boost Chinese purchases of US products.

Aluminium led the increase with a rise of 2.36%. Lead advanced 1.97%, zinc climbed 0.63%, tin added 0.39%, nickel increased 1.76%, while copper shed 0.34%. 

The ferrous complex closed mixed as rebar rose 0.25%, stainless steel grew 0.5%, coke edged higher, while iron ore declined 1.2%, and hot-rolled coil inched down. 

Copper: The most-traded SHFE 2003 contract held stable around 49,200 yuan/mt despite moderation, with support from trade optimism and improved sentiment after China’s central bank added 300 billion of liquidity to help offset an expected squeeze on cash ahead of the Chinese New Year holiday. The contract closed 0.34% lower on the day at 49,200 yuan/mt. Technical indicators suggested limited downward pressure, and this may see the contract moving higher to test 49,400 yuan/mt tonight.

Aluminium: Shanghai aluminium soared on Thursday as longs aggressively loaded up their positions on the back of a smaller-than-expected rise in social inventories of primary aluminium. Capacity addition and resumption at Chinese smelters also came slower than the market expected, which kept aluminium ingot tight in the spot market and sustained a backwardation structure of SHFE aluminium. The most-traded SHFE 2003 contract ended at an intraday high of 14,300 yuan/mt, up 2.36% on the day. The contract may stay at high levels tonight, but the upward momentum could fade as longs book profits and exit. 

Zinc: The most-liquid SHFE 2003 contract extended its increase from the previous day and gained for the second straight session by 0.63%, ending at 18,295 yuan/mt. Market sentiment was boosted as the signing of an initial trade agreement between China and the US removed some uncertainties for the world economy. Tonight, the contract is expected to follow its LME counterpart higher and test pressure from the Bollinger upper band. 

Nickel: With support from the daily moving average, the most-traded SHFE 2003 contract consolidated around 111,400 yuan/mt and finished up 1.76% on the day at 111,210 yuan/mt, the second consecutive day of increase. It is likely to track its LME counterpart tonight.

Lead: The most-traded SHFE 2003 contract closed higher for the second consecutive day as it breached 15,250 yuan/mt to hit a high of 15,320 yuan/mt, before ending up 1.97% at 15,300 yuan/mt. A robust LME lead may continue to boost the contract and lift it above the Bollinger upper band tonight. 

Tin: The most-traded SHFE 2006 contract relinquished most of its early gains as it pulled back after climbed to an intraday high of 141,250 yuan/mt, finishing 0.39% higher on the day at 139,730 yuan/mt. Pressure above is seen from 142,200 yuan/mt, with support expected at 138,600 yuan/mt.