SMM Evening Comments (Dec 9)

SHANGHAI, Dec 9 (SMM) – SHFE nonferrous metals, except for nickel, rose across the board on Monday. Copper led the increases and advanced 2.26%. Aluminium gained 0.43%, lead rose 0.46%, zinc climbed 0.33%, tin added 0.81%, while nickel lost 0.96%. 

The ferrous complex also traded higher for the most part. Iron ore soared 5.58%, rebar grew 2.75%, hot-rolled coil increased 1.6%, coke went up 2.91%, while stainless steel fell 0.11%. 

Copper: The most-liquid SHFE 2002 contract hit the highest in six months, at 48,450 yuan/mt, before ended up 2.26% on the day at 48,440 yuan/mt, buoyed by rallied market sentiment following upbeat data around US nonfarm payrolls. Prices of the metal were also boosted as crude oil prices rose to a nearly two-month peak after OPEC and its allies agreed to deepen production cuts to prop up the market. The contract has shrugged off resistance from the Bollinger middle band. With bullish signals from technical indicators, the contract may continue its rally and test pressure from 48,500 yuan/mt tonight. 

Zinc: Loaded-up bullish position drove the most-liquid SHFE 2002 contract to end higher for the fifth straight session, by 0.22% on the day at 17,900 yuan/mt. Continued slide in social inventories of refined zinc over the weekend offered upward momentum in prices. As the KDJ indicators expanded upwards and MACD red line lengthened, the contract is likely to test resistance from 18,000 yuan/mt tonight.  

Nickel: The most-liquid SHFE 2002 contract failed to hold onto gains from the early session, as it slumped more than 2,000 yuan/mt to hit an intraday low of 104,230 yuan/mt amid aggressively loaded-up shorts. It closed down 0.96% on the day at 104,710 yuan/mt. Changes in the open interest will be monitored tonight. The contract is expected to test support from 104,000 yuan/mt tonight. 

Lead: The most-traded SHFE 2001 contract climbed on a broad rally in SHFE base metals, closing 0.46% higher on the day at 15,140 yuan/mt. Open interest lost 5,296 lots to 70,318 lots as investors covered their shorts. As LME lead remained at lows, the contract may see limited upward room tonight with heavy pressure from the 10-day moving average. 

Tin: The most-liquid SHFE 2001 contract stabilised above the 140,000 yuan/mt level, and finished at 140,230 yuan/mt, up 0.81% on the day. Short-covering accounted for the increase. The contract may further trend upsides with investors cutting their bearish position. Pressure above is seen from 140.500 yuan/mt tonight.