SMM Evening Comments (Feb 13)

SHANGHAI, Feb 13 (SMM) – The SHFE base metals and ferrous complex declined on Wednesday February 13 as bullish sentiment eased and the US dollar remained at highs. Tin and nickel lost over 1%, zinc fell 0.83%, lead dipped 0.69%, copper slid 0.35%, and aluminium edged down. 

Iron ore dropped more than 3%, rebar and hot-rolled coil fell over 2%, coke went down over 1%, and coking coal closed 0.43% lower. 

Copper: A buildup of longs after opening pulled the SHFE 1904 contract above 48,250 yuan/mt. It failed to stand firm above that level and dipped to a low of 48,150 yuan/mt in the afternoon. It rebounded near closing but ended lower on the day at 48,280 yuan/mt, with open interests up 7,986 lots to 166,000 lots. The contract faced resistance at the five-day moving average and the Bollinger upper band, with support at the 40-day moving average. Pressure from the US dollar reduced today. The contract is expected to test support at the 48,250 yuan/mt level tonight. 

Aluminium: Exiting shorts lifted the SHFE 1903 contract to an intraday high of 13,395 yuan/mt after opening, but pressure at the 13,400 yuan/mt level and weak fundamentals lowered prices in the afternoon. The contract ceased falling at 13,345 yuan/mt and closed in the Bollinger lower band, at 13,350 yuan/mt. Open interests lost 7,326 lots to 237,000 lots. The weak trend is likely to linger tonight. 

Zinc: The SHFE 1903 contract consolidated around the daily moving average after it climbed above that level after opening when shorts left. Open interests shrank by 9,046 lots to 164,000 lots. The continued outflow of capitals is likely to see dominant contract transfer to the 1904 contract earlier than expected. Tonight, the 1903 contract may face pressure from its weaker LME counterpart during the European trading session and the potential accumulation of domestic inventories. It will test support below at the 20-day moving average. 

Nickel: The SHFE 1905 contract found pressure from the US dollar and dipped to an intraday low of 97,930 yuan/mt in the afternoon, after declining shorts lifted it in the morning. Support at the 120-day moving average ended the contract at 98,350 yuan/mt. As the KDJ indicators expanded downwards and the MACD red line shortened, it is expected to consolidate above the 120-day moving average tonight. 

Lead: The SHFE 1903 contract hovered weakly below the daily moving average, or the 16,600 yuan/mt level after opening. As shorts left at noon, the contract climbed and ended at 16,710 yuan/mt, indicating continued support below after prices fell significantly overnight. Tonight, the contract is likely to remain rangebound. 

Tin: As investors cut their longs, the SHFE 1905 contract declined near closing, to an intraday low of 147,800 yuan/mt, and ended at 147,940 yuan/mt. This came after it traded rangebound around 148,200 yuan/mt. Open interests lost 846 lots to 31,372 lots. Currently at around the five- and 20- day moving averages, the contract will receive support at the 60-day moving average tonight.