SMM Evening Comments (Aug 24)

SHANGHAI, Aug 24 (SMM) – Nonferrous metals futures, except for SHFE nickel, gained across the board. Lead led increases and closed nearly 3% higher. Zinc jumped 2.1%, aluminium rose 0.82%, copper grew 0.52%, and tin inched up 0.21%. 

The ferrous complex saw mixed trades. Hot-rolled coil surged over 1%, rebar gained 0.49%, iron ore increased 0.31%, while coke fell 0.43%, and coking coal lost 2.2%.

Copper: The SHFE 1810 contract rebounded at noon as shorts left and longs entered, to a high of 48,750 yuan/mt. It may take a few days for the contract to stand firm above the 49,000 yuan/mt level as market participants remained cautious today. We expect it to consolidate around 48,500 yuan/mt tonight. Investors would take more guidance tonight from data of US durable goods orders in July. 

Aluminium: With support from the five-day moving average and improved market sentiment, the SHFE 1810 contract climbed to a high of 14,825 yuan/mt. It closed above the 10- and 20-day moving averages at 14,790 yuan/mt, with open interests down 1,738 lots to 118,000 lots. Higher costs of alumina are likely to continue to buoy prices tonight. 

Zinc: Longs pulled the SHFE 1810 contract above the Bollinger middle band and the 21,000 yuan/mt level, to an intraday high of 21,320 yuan/mt in the afternoon. The contract closed at 21,070 yuan/mt with, up 460 yuan/mt from Thursday. It is unlikely to decline significantly in the short term, given current 10-year lows of warehouse warrants at SHFE warehouses. The contract may try to stand firm above 21,000 yuan/mt during the European trading session tonight with support from a stronger LME zinc. 

Nickel: The SHFE 1811 contract traded weakly today and closed at 110,100 yuan/mt. Open interests gained 12,000 lots to 280,000 lots. Pressure at the 110,000 yuan/mt level is likely to weigh on the contract tonight. As the KDJ indicators expanded downwards and the MACD green line lengthened, the contract is likely to hover around 109,800 yuan/mt tonight. 

Lead: The SHFE 1810 contract increased during the day and rose above the 40-day moving average. Open interests gained 4,808 lots to 63,974 lots. The SHFE 1810 and 1811 contracts saw a capital inflow of some 75 million yuan today, and this may continue to bolster lead prices tonight. 

Tin: The SHFE 1901 contract remained rangebound as it hovered between five- and 10-day moving averages. It inched up 810 yuan/mt from Thursday to close at 145,790 yuan/mt. Pressure above is expected at 147,000 yuan/mt. Investors would take more guidance from prices of LME tin tonight.