SMM Evening Comments (Jan 17)

SHANGHAI, Jan 17 (SMM) – SHFE nonferrous metals, except for tin, ended in the black on Thursday. Zinc jumped 1.4%, lead rose 0.8%, copper climbed 0.5%, aluminium advanced 0.3% and nickel gained 0.1%.

The ferrous complex also traded higher. Hot-rolled coil gained nearly 1%, rebar and coke increased by some 0.7%, iron ore inched up 0.2% and coking coal nudged up 0.04%.

Copper: The SHFE 1903 contract fluctuated to end the trading day 0.5% higher at 47,380 yuan/mt. This helped it to stand firmly above the five-day moving average. With a MACD golden cross, the contract is expected to try to break through 47,500 yuan/mt tonight.

Aluminium: As shorts added over 2,000 lots, the SHFE 1903 contract fell to a low of 13,350 yuan/mt after opening. This prompted longs to add and shorts to cut bets, allowing the contract to recover the losses to end the trading day 0.3% higher at 13,395 yuan/mt. The KDJ lines expanded upwards with a significantly shorter MACD green bar. With weak fundamentals, we remain cautious about SHFE aluminium.

Zinc: The SHFE 1903 contract held onto overnight gains during the day and ended at 20,885 yuan/mt, up 1.4% on the day. Losses in its LME counterpart during the European hours and weaker consumption are likely to erode upward momentum in SHFE zinc, which is expected to trade rangebound under pressure from the upper Bollinger band tonight.

Nickel: The SHFE 1905 contract traded rangebound to close the trading day 0.1% higher at 92,820 yuan/mt. Its KDJ lines converged with a shortened MACD red bar. It is expected to try to stand firmly above the five-day moving average tonight.

Lead: The SHFE 1902 contract climbed after hovering around the daily moving average in early trades. It finished the trading day 0.8% higher at 17,650 yuan/mt, marking the fourth straight of one-day gain. Short-covering primarily accounted for recent gains in SHFE lead, suggesting limited upward momentum. The SHFE 1902 contract is likely to test pressure at the 20-day moving average tonight with support at the 10-day moving average.

Tin: As longs took profits, the SHFE 1905 contract lost nearly half of its earlier gains shortly before closing. It ended the trading day 0.5% lower at 147,990 yuan/mt. Support was seen at the five- and 60-day moving averages. The contract is likely to extend its losses in the near term with support at 147,000 yuan/mt.