SMM Evening Comments (May 13)

SHANGHAI, May 13 (SMM) – Most SHFE nonferrous metals closed lower on Monday, with the biggest loss of 1.4% in lead. Zinc fell 0.4%, copper and tin lost about 0.2%, while nickel rose 0.6% and aluminium climbed close to 0.9%.

The ferrous complex, except for iron ore, traded lower on the day. Hot-rolled coil dropped 1.7%, coke declined 1.5%, rebar shed 1.2% and coking coal sank 0.4%.

Copper: The most active SHFE July contract pared Friday night gains to finish the trading day 0.21% lower at 47,660 yuan/mt, with support from the lower Bollinger band. A total of 196 million yuan left copper contracts on the SHFE, the most among nonferrous metals. The market is likely to seek clues from its LME counterpart tonight, and test the 47,500 yuan/mt level.

Aluminium: The most traded SHFE June contract extended Friday night’s gains to close the trading day 0.85% higher at 14,225 yuan/mt, registering a five-day winning streak. The unwinding of short positions primarily accounted for the gains. SMM data showed that inventories of primary aluminium across major consumption areas in China continued to fall over the weekend, losing 36,000 mt between May 10-13. This reflected improving demand, and will support prices in the short term.

Zinc: The most active SHFE July contract fluctuated around the daily moving average during the day, failing to recover from Friday night’s loss to end at 20,830 yuan/mt, down 0.36% on the day. Resistance was strong at the five-day moving average. Despite a moderate decline in social inventories of refined zinc across Shanghai, Guangdong and Tianjin over the weekend, market focus has turned to a potential increase in supply. This, together with declines in its LME counterpart during European trading hours, is likely to weigh on SHFE zinc tonight.

Nickel: The most traded SHFE July contract recovered from earlier losses to close the trading day 0.58% higher at 96,370 yuan/mt. Its KDJ lines diverged and expanded upwards, with a shortened MACD green bar. The contract is expected to test the 10-day moving average tonight.

Lead: The most active SHFE June contract finished the trading day 1.36% lower at 15,955 yuan/mt, after the loading up of short positions dragged it to a fresh two-year low of 15,940 yuan/mt shortly before closing bell. SHFE lead has fallen below the lower Bollinger band, and is likely to extend its losses tonight, with a weak LME counterpart.

Tin: The most traded SHFE September contract jumped to an intraday high of 146,970 yuan/mt shortly after this morning’s opening, before the unwinding of long positions and the buildup of short positions forced it to give up those gains to end the trading day 0.16% lower at 145,680 yuan/mt. Support is seen at 145,000 yuan/mt.