SMM Evening Comments (Dec 12)

SHANGHAI, Dec 12 (SMM) – SHFE nonferrous and ferrous metals ended mixed on Wednesday. 

Lead jumped 0.42%, copper, zinc, and tin nudged up, while aluminium fell 0.59%, and nickel lost 0.36%. Hot-rolled coil increased nearly 1%, coke went up slightly, while rebar and iron ore dipped 0.4%, and coking coal edged down. 

Copper: The SHFE 1902 contract opened at an intraday high of 49,300 yuan/mt and declined in the morning as LME copper weakened and shorts accumulated. Supported by the five-day moving average, the contract closed at 49,080 yuan/mt after it dipped to a low of 49,060 yuan/mt. Open interests shrank 1906 lots, and some 33.85 million yuan of capital left across all SHFE copper contracts. We expect the contract to test support at the five-day moving average, or 49,052 yuan/mt tonight. 

Aluminium: The SHFE 1902 contract traded weakly below the daily moving average, and settled below the 20-day moving average, at 13,615 yuan/mt. Reports about new capacity starts at domestic smelters weighed on the contract. We expect it to continue to test support at the five-day moving average tonight. 

Zinc: Slower downstream demand curtailed the upward momentum in the SHFE 1902 contract that slid to a low of 20,960 yuan/mt at noon but received support at the 40-day moving average. It settled at 20,980 yuan/mt with open interests up 5,712 lots to 227,000 lots. We see the contract testing support at 21,000 yuan/mt tonight. 

Nickel: The SHFE extended its decline and registered the seventh consecutive trading day of decrease on Wednesday. It traded rangebound today with pressure above at the 89,100 yuan/mt level. As its KDJ indicators expanded downwards and the MACD green line shortened, we expect the contract to test support at 88,500 yuan/mt tonight.

Lead: Longs pulled the SHFE 1901 contract to an intraday high of 18,590 yuan/mt near closing. It settled at 18,560 yuan/mt as some longs took profits and left. Heavy pressure was above at the 18,600 yuan/mt level, and this will keep the contract around the five-day moving average tonight. 

Tin: The SHFE 1905 contract fell after it jumped to an intraday high of 146,840 yuan/mt. Weak demand grew shorts, and this settled the contract 170 yuan/mt lower on the day at 145,900 yuan/mt. Support below is set at 145,000 yuan/mt in the short run.