SMM Evening Comments (Dec 12)

SHANGHAI, Dec 12 (SMM) – SHFE nonferrous metals rose for the most part on Thursday, with nickel leading the increase with a jump of 3.12%. Copper advanced 0.47%, lead gained 0.86%, zinc climbed 1.06%, while aluminium eased 0.32%, and tin lost 0.55%. 

The ferrous complex traded on a mixed note. Hot-rolled coil added 1.75%, stainless steel grew 0.67%, while iron ore declined 0.15%, rebar fell 0.11%, and coke dropped 0.81%. 

Copper: Optimistic macroeconomic sentiment drove the most-liquid SHFE 2002 contract higher for the fourth consecutive day. The contract pared part of the overnight increase and finished up 0.47% on the day at 49,030 yuan/mt. Open interest shrank 3,884 lots to 281,000 lots as short position departed. The contango structure showed signs of expansion, indicating bullish prospects for long-term prices. As the MACD red line continued to lengthen, the contract may manage to stand above 49,000 yuan/mt tonight. 

Aluminium: The most-liquid SHFE 2001 contract retreated after three consecutive days of increase, falling below moving averages to an intraday low of 13,930 yuan/mt and ending down 0.32% on the day at 13,955 yuan/mt. Despite heavy pressure from 14,000 yuan/mt, the decline was capped as social inventories of primary aluminium continued to fall on the week. SMM sees limited downside room in the contract tonight. 

Zinc: The most-active SHFE 2002 contract regained losses from the prior session, as it shrugged off resistance from the five- and 20- day moving averages to an intraday high of 18,095 yuan/mt, finishing 1.06% higher at 18,055 yuan/mt. Exiting shorts accounted for the price rally. The MACD red line again expanded tonight, indicating some upward momentum. This may see the contract testing pressure from the Bollinger middle band tonight.  

Nickel: The most-active SHFE 2002 contract extended its price rally from the previous session, as short-covering lifted the contract above the five- and 10- day moving averages, before pressure from the 20-day moving average ended it at 110,190 yuan/mt, 3.12% higher on the day. Open interest lost 39,000 lots to 351,000 lots. Tonight, the contract may hover rangebound at 110,000 yuan/mt.  

Lead: The most-traded SHFE 2001 contract gained for the sixth straight day as investors cut their bearish position. It consolidated around the daily moving average and hit an intraday high of 15,315 yuan/mt before closed up 0.86% on the day at 15,300 yuan/mt. It held firm above the 10-day moving average but may face difficulty to climb above the 20-day moving average tonight as LME lead came off from highs during the European trading hours. 

Tin: The most-active SHFE 2001 contract pulled back after four consecutive days of increase, as long position booked profits and left, weighing the contract to an intraday low of 140,300 yuan/mt before it closed down 0.55% on the day at 140,710 yuan/mt. Support remained from the five-day moving average. The contract is expected to test support from 140,500 yuan/mt, or 140,000 yuan/mt tonight.