SMM Evening Comments (Apr 1)

SHANGHAI, Apr 1 (SMM) – SHFE nonferrous metals and the ferrous complex rose across the board on Monday April 1 as macroeconomic sentiment improved. Nickel advanced by nearly 3%, zinc jumped 2.57%, copper rose 1.69%, aluminium gained 1.28%, lead grew 1.22%, and tin went up 0.55%. 

Iron ore closed 4.67% higher, rebar and coke increased 2.1%, hot-rolled coil grew nearly 2%, and coking coal gained 1.5%.

Copper: The most-active SHFE May contract shrugged off pressure from several moving averages and rose to the Bollinger middle band. A higher LME copper lifted the contract to a high of 49,470 yuan/mt around noon, and exiting shorts again buoyed it to that level near closing. The contract ended 1.69% higher on the day at 49,460 yuan/mt, with open interests losing 18,000 lots to 189,000 lots. As the MACD green line shortened, the contract is likely to test pressure from 49,500 yuan/mt tonight. 

Aluminium: As investors added longs and cut shorts amid robust Chinese manufacturing data and US-China trade hopes, the most-traded SHFE May contract climbed to a high of 13,900 yuan/mt around noon. It ended 1.09% higher on the day at 13,870 yuan/mt, with open interests up 3,328 lots to 262,000 lots. Further upward room is expected tonight as the MACD red line lengthened. A lower value-added tax effective today drove spot offers into a discount of 30-20 yuan/mt, against the SHFE front-month April contract. Given lower social stocks of primary aluminium over the weekend, SMM remains bullish on the downstream consumption in April and expects higher spot prices in the near term. 

Zinc: A robust LME zinc bolstered the most-liquid SHFE May contract, to break pressure from the 23,000 yuan/mt level, to an intraday high of 23,160 yuan/mt. It ended above the Bollinger upper band at 23,135 yuan/mt, with open interests down 2,640 lots to 295,000 lots. Lower inventories of refined zinc across social warehouses are likely to keep it above the Bollinger upper band tonight. 

Nickel: The SHFE May contract broke resistance from 102,300 yuan/mt at noon, and rallied to an intraday high of 103,200 yuan/mt, before it settled 2.93% higher at 103,130 yuan/mt. It led gains among base metals today. Open interests lost 12,000 lots to 200,000 lots. As the MACD green line shortened, and the KDJ indicators expanded upwards, the contract may test pressure from 103,300 yuan/mt tonight.  

Lead: A better-than-expected Chinese manufacturing purchasing managers index for March drove a rebound in base metals, but weak fundamentals capped increases in SHFE lead contracts. The most-traded SHFE May contract traded rangebound after exiting shorts pulled it to an intraday high of 16,950 yuan/mt. It closed 1.22% higher on the day at 16,945 yuan/mt, with open interests down 1,486 lots to 42,616 lots. Fundamentals may continue to limit its upward momentum tonight.  

Tin: The SHFE May contract traded rangebound above the daily moving average, or the 148,500 yuan/mt level today. It ended at 148,480 yuan/mt, after it jumped to an intraday high of 148,930 yuan/mt at noon. Optimism around the US-China trade talks lifted the contract. Support from the 60-day moving average is likely to see it testing resistance at 149,000 yuan/m tonight.