SMM Evening Comments (Feb 11)

SHANGHAI, Feb 11 (SMM) – SHFE base metals traded mixed on the first trading day after the Chinese New Year break. Lead saw the largest loss of 3.8%, zinc dropped 3.1% and aluminium fell 1.1% while copper nudged up 0.04%, tin rose 1.4% and nickel jumped 2%.

The ferrous complex, except for coking coal, traded higher. Iron ore rose close to 8%, rebar surged 2.4%, hot-rolled coil advanced 2.3% and coke gained 0.8%.

Copper: The SHFE 1903 contract lost most of its gains from a higher open today, and inched up 0.04% to close at 48,190 yuan/mt. It failed to remain above the 60-day moving average and the upper Bollinger band but support was seen at the five- and 40-day moving averages. Post-holiday consumption has yet to kick in as the holiday festivities continued. The contract is expected to try to remain above 48,100 yuan/mt tonight.

Aluminium: The SHFE 1903 contract weakened 1.1% to end at 13,315 yuan/mt today. The buildup of short positions accounted for the decline in SHFE aluminium. It is likely to see further downside room tonight after social inventories of primary aluminium in China substantially expanded over the holiday.

Zinc: Losses in LME zinc and gains in social inventories during the CNY break weighed on zinc prices today, with the SHFE 1903 contract ending 3.1% lower at 21,610 yuan/mt. This forced the contract to give up most gains made in the last week before the holiday. The contract is expected to try to stand firm above 21,500 yuan/mt tonight.

Nickel: A surge in iron ore prices bolstered the SHFE 1905 contract to a high of 101,950 yuan/mt today after a higher open. It then relinquished some gains to finish 2% higher at 100,350 yuan/mt as longs took profits. Potential output growth of nickel pig iron and uncertain consumption of stainless steel after the CNY break kept longs cautious. The contract is expected to try to remain above 100,200 yuan/mt tonight.

Lead: After a negative open, the SHFE 1903 contract lost 3.8% to close at 16,770 yuan/mt today, as shorts aggressively loaded up their bets. Losses in its LME counterpart and gains in social inventories in China over the CNY break accounted for the sharp decline in SHFE lead. The contract is expected to hover around lows tonight.

Tin: The SHFE 1905 contract jumped past the 149,000 yuan/mt and 150,000 yuan/mt levels to close today 1.4% higher at 150,500 yuan/mt. Its strong LME counterpart is expected to keep it at highs in the near term with resistance at 152,000 yuan/mt.