SMM Evening Comments (May 2)

SHANGHAI, May 2 (SMM) – Nonferrous metals rebounded on the afternoon of May 2, buoyed by ferrous metals. SHFE lead rose 1.58% and nickel gained close to 1%. Zinc inched up slightly. Copper closed nearly 1% lower while aluminium and tin edged down.

The ferrous complex rose across the board. Rebar led the increase with a gain of 4.28%. Coke and coking coal grew about 4%. Hot-rolled coil jumped over 3% and iron ore rose over 2%.

Copper: The SHFE 1806 contract climbed up during the day as LME copper recovered losses of the last two days. The contract also received support from the better-than-expected results of China’s Caixin manufacturing PMI in April. US-Sino trade tension eased as both parties agreed to negotiations. We see copper prices trading rangebound with upward room tonight.

Aluminium: After it dipped to a low of 14,460 yuan/mt with pressure from the 20-day moving average, the SHFE 1807 contract received support from the 60- and five-day moving averages. The contract is expected to trade rangebound in the short term. Investors should take cues from the development of the sanctions on Russian aluminium and changes in domestic supply and demand.

Zinc: The SHFE 1806 contract mostly hovered at 24,000 yuan/mt today. It is unlikely to stand firm at high levels in the short run. We see it hovering below 24,000 yuan/mt tonight.

Nickel: As investors added their longs, the SHFE 1807 contract rose above several moving averages to a high of 105,300 yuan/mt. It received strong support at the 20-day moving average. We see it trading with upward room tonight. Investors should take more cues from the US ADP employment changes in April and the Energy Information Administration's crude oil inventory for the week ended April 27.

Tin: The SHFE 1809 contract traded rangebound today, with the lowest level of 146,650 yuan/mt at noon. Most market participants expect the US Federal Reserve to keep interest rates unchanged tonight, and the contract is likely to continue its rangebound trend in the short term with support at 146,000 yuan/mt and pressure at 148,000 yuan/mt.

Lead: The SHFE 1806 contract stood above the 40-day moving average and rose above 18,500 yuan/mt today. It is likely to gain further tonight. Investors would watch out for a stronger US dollar that could weigh on SHFE lead tonight. 

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