SMM Evening Comments (May 7)

SHANGHAI, May 7 (SMM) – Nonferrous metals futures rose for the most part on Monday May 7 as SHFE zinc led the gains with an increase of nearly 2.3%. Lead grew 2%, aluminium and nickel inched up, and copper went flat. Tin dipped slightly.

The ferrous complex saw coking coal surge almost 4%. Coke gained over 2%, while hot-rolled coil and iron ore inched up. Rebar went down slightly.

Copper: The SHFE 1807 contract rebounded after hitting a low of 51,130 yuan/mt, but it met resistance at the five-day moving average. As both the US dollar index and crude oil price gained today, the contract is likely to trade rangebound with apparent pressure tonight. Investors would look for guidance from the US dollar tonight.

Aluminium: The SHFE 1806 contract climbed up to a high of 14,700 yuan/mt today as lead, zinc and most ferrous metals gained. While SMM data showed a rise in aluminium inventory today, we believe the downstream demand remains firm. The increase has more to do with latent inventory change, including stocks at traders moving to major consumption markets. More cues to be taken from other metals prices and the ferrous complex tonight.

Zinc: Longs added to their positions towards the end of the trading session today and the contract closed at 23,830 yuan/mt, from a low of 23,470 yuan/mt. However, we see pressure at the 10- and 20-day moving averages.

Nickel: With support at the 20-day moving average, SHFE 1807 contract rebounded after dipping twice during the day. It is likely to trade rangebound tonight.

Tin: The SHFE 1809 contract edged down to close at 147,440 yuan/mt today while most other metals futures gained. We see resistance at 148,000 yuan/mt and support at 146,000 yuan/mt.

Lead: The SHFE 1806 contract broke the rangebound trend and surged to a high of 18,965 yuan/mt today as investors added their long positions. It is likely to hover at high levels tonight.

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