SMM Evening Comments (Jan 28)

SHANGHAI, Jan 28 (SMM) – SHFE nonferrous metals ended mixed at the start of the last week before the Chinese New Year holiday. Zinc climbed 0.9%, nickel advanced 0.6%, copper gained 0.5% while lead edged down 0.06%, aluminium slipped 0.3% and tin fell 0.7%.

The ferrous complex also traded mixed. Iron ore saw the biggest gain of 2.8%, coking coal inched up 0.04% while coke declined 0.7%, rebar slid 0.8% and hot-rolled coil lost some 1%.

Copper: The SHFE 1903 contract weakened during daytime trading hours and ended at 47,540 yuan/mt. It gained 0.5% on the day, due to the unwinding of short positions. The day’s highs stood higher than the middle Bollinger band while the five-, 10- and 20-day moving averages adhered to one another. The contract is expected to test the 47,500 yuan/mt level tonight.

Aluminium: The SHFE 1903 contract lost gains from Friday night to fall into negative territory today, ending at 13,485 yuan/mt. Sluggish consumption ahead of the CNY break and cheaper raw materials prompted shorts to load up positions, resulting in today’s decline in SHFE aluminium. The contract is expected to trade rangebound tonight.

Zinc: The SHFE 1903 contract fluctuated and managed to hold onto Friday night gains to close at 21,810 yuan/mt. It is likely to trade rangebound around the upper Bollinger band tonight.

Nickel: A surge in iron ore, triggered by a burst dam in Brazil, and declines in domestic nickel inventories improved confidence among longs, leading to a jump in the SHFE 1905 nickel contract shortly after this morning’s opening bell. The contract later lost those gains to close at 95,050 yuan/mt as longs covered their positions. Its KDJ lines converged with a shorter MACD red bar. The contract is expected to try to hang on above 95,000 yuan/mt tonight.

Lead: Following declines across SHFE nonferrous metals, the SHFE 1903 contract staged a turnaround after it extended Friday night gains to the day’s highs at 17,860 yuan/mt. It finished the day marginally lower at 17,705 yuan/mt. The contract came off from earlier highs, for two consecutive trading days, reflecting limited upward momentum. Besides, longs are unlikely to add their bets when trades are quiet ahead of the CNY holiday. This grows the risks of a pull-back in SHFE lead.

Tin: The SHFE 1905 contract fell to an intra-day low of 147,330 yuan/mt after it hovered in a tight range. It later recovered those losses to close at 147,700 yuan/mt. Support was at the 60-day moving average while resistance was at the five- and 10-day moving averages.