SHANGHAI, May 28 (SMM) – Nonferrous metals, except for SHFE lead, rose across the board on Monday May 28. SHFE tin led the increases with a gain of over 2%. SHFE zinc rose nearly 1.6%, while nickel, copper, and aluminium inched up.
Most ferrous metals closed lower except for coking coal. Iron ore fell nearly 1%, while coke, hot-rolled coil, and rebar dipped.
Copper: As shorts continue to exit the market, the SHFE 1807 contract climbed up during the day. Shorts and longs drove the contract to a session-high of 51,630 yuan/mt before closure. Technically, it now struggles between the five- and 60-day moving averages with support from the 10- and 20-day moving averages. We expect it to continue its rangebound pattern tonight.
Aluminium: The SHFE 1807 contract initially hit a high of 14,850 yuan/mt in the morning but closed lower at 14,800 yuan/mt in the afternoon as investors exited the market. Open interest for SHFE aluminium registered a new low since August 1 last year and stood at 640,000 lots. Trading volumes also registered a fresh low since June 26, 2017 and came in at 213,000 lots. We expect it to remain rangebound in the short term.
Zinc: The SHFE 1807 contract surged and tested pressure at the 40-day moving average during the day. A total of 19,500 lots of open interest shrank in the 1806 and 1807 contracts while open interest in the 1808 contract increased nearly 14,000 lots. We see resistance at the 40-day moving average and the 24,000 yuan/mt level and expect it to test the pressure above tonight.
Nickel: As investors added their longs, the SHFE 1807 contract gained during the day and touched a high of 110,640 yuan/mt . The contract is likely to strengthen further tonight as KDJ indicators barely diverged from one another and as the longer-term moving average of the MACD lengthened.
Lead: Longs initially bolstered the SHFE 1807 contract to the five-day moving average. The contract then hovered around the 19,850 yuan/mt level within a range of 80 yuan/mt for the most of the day. We see the contract sustaining its upward momentum in the short term as it has not broken the five-day moving average. We expect the contract to continue to consolidate at high levels tonight.
Tin: The SHFE 1809 contract soared during the day and hit a high of 150,830 yuan/mt before closure. Its open interest jumped 7,210 lots today. We expect it to continue to rise in the short term with resistance at the 152,000 yuan/mt level.
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