SMM Evening Comments (Oct 22)

SHANGHAI, Oct 22 (SMM) – SHFE nonferrous contracts rose across the board while the ferrous complex closed mixed on Monday. 

SHFE nickel led the increase and jumped 1.92%, copper grew 0.92%, lead nudged up 0.57%, tin gained 0.4%, zinc went up 0.36%, and aluminum rose 0.28%. 

Iron ore surged 1.65%, rebar grew 1.49%, hot-rolled coil increased 0.91%, while coke fell 1.17%, and coking coal lost 0.91%. 

Copper: As market confidence bolstered confidence across longs, the SHFE 1812 contract jumped above the daily moving average to a high of 50,580 yuan/mt near closing. It settled at 50,510 yuan/mt with open interests up 11,084 lots to 159,000 lots. Some 173 million yuan of capital entered all SHFE copper contracts, the greatest amount across base metals contracts. With support at the five-day moving average, the contract may continue to test pressure at the 50,500 yuan/mt level tonight. 

Aluminium: Improved market sentiment and shrinking inventories bolstered the SHFE 1812 contract, which rebounded from a low of 14,015 yuan/mt and rose to an intraday high of 14,220 yuan/mt. However, the contract failed to break resistance at the daily moving average and settled at 14,175 yuan/mt. It is likely to test pressure at the five-day moving average tonight. 

Zinc: The SHFE 1812 contract regained its losses from last Friday and returned to the 22,000 yuan/mt level as market sentiment improved. As downstream demand from long-term contracts grew steadily and inventories stopped expanding, the contract is expected to hover between the five- and 10-day moving averages, with support at 22,000 yuan/mt tonight. 

Nickel: The SHFE 1901 contract received support at the 20-day moving average as investors cut their shorts and added longs today. It closed at 104,220 yuan/mt after rising to an intraday high of 104,630 yuan/mt. Open interests shrank 10,000 lots to 258,000 lots. We expect the contract to retain its robust trend and hover around 104,000 yuan/mt tonight. 

Lead: The SHFE 1812 contract picked up after four consecutive days of decline, as SHFE base metals rose across the board today. Exiting shorts pulled it above the 10-day moving average to an intraday high of 18,265 yuan/mt near closing. Tonight, it is expected to test pressure above at the five-day moving average, with support at the 20-day moving average.  

Tin: As longs took profit and left, the SHFE 1901 contract came off from a high of 148,000 yuan/mt and closed at 147,370 yuan/mt. Open interest accumulated 252 lots to 32,862 lots. Its resistance above is set at 149,000 yuan/mt tonight with support at 146,000 yuan/mt.