While improved macroeconomic developments buoyed SHFE nonferrous contracts across the board, ferrous complexes mostly extended their declines on Friday.
SHFE copper led increases and rose 2.11%, nickel grew 1.76%, zinc jumped 1.7%, lead gained 1.13%, tin went up 0.62%, and aluminium closed 0.32% higher.
Hot-rolled coil nudged up 0.11%, while iron ore slumped 3.51%, coking coal lost 2.54%, rebar declined 0.85%, and coke fell 0.57%.
Copper: A weaker US dollar index bolstered the SHFE 1901 contract to a high of 49,960 yuan/mt in the afternoon, after the contract struggled around 49,135 yuan/mt in the morning. It closed at 49,830 yuan/mt, with open interests down 3,264 lots. Some 157 million yuan of capital left all SHFE copper contracts, the greatest among base metals. Currently between the Bollinger middle and lower bands, the 1901 contract may see more shorts leaving the market tonight. It will test pressure above at the 50,000 yuan/mt level tonight.
Aluminium: As SHFE base metals contracts rallied across the board in the afternoon, the SHFE 1901 contract also broke pressure at the daily moving average and rose to an intraday high of 14,010 yuan/mt. Without strong support, the contract edged down from highs to settle at 13,970 yuan/mt. We expect do not expect this surge to sustain tonight.
Zinc: Improved market sentiment pulled the SHFE 1901 contract fast above the five-day moving average after it fell below the 40-day moving average. A continued decline in SMM zinc social inventories data also grew confidence across longs. We expect the contract to extend its robust trend tonight, and to stand firm above the five-day moving average.
Nickel: The SHFE 1901 contract ended its six consecutive trading days of decline as it grew 1,710 yuan/mt from Thursday to close at 98,680 yuan/mt, buoyed by positive macroeconomic sentiment. Open interests shrank 57,000 lots, with shorts accounting for the majority. We expect the contract to test support at the five-day moving average and try to stand above 100,000 yuan/mt tonight as its MACD green line shortened. Investors may take more cues tonight from the US unemployment data for October, its durable goods orders, and factory orders data for September.
Lead: Investors added longs and cut shorts on expectations of eased trade tension between China and the US, and this buoyed the SHFE 1812 contract to a high of 18,765 yuan/mt near closing. The contract settled at 18,750 yuan/mt, approaching the Bollinger upper band and above all moving averages. We see it testing resistance above at 18,900 yuan/mt tonight.
Tin: After trading rangebound around 145,800 yuan/mt in the morning, the SHFE 1901 contract received support from existing shorts and rising SHFE base metals, and jumped to close at 146,640 yuan/mt. The strong trend is likely to extend tonight. Pressure above is set at 147,000 yuan/mt.