SMM Evening Comments (Jul 10)

SHANGHAI, Jul 10 (SMM) – SHFE nonferrous metals, except for copper, closed higher on Wednesday, with the biggest gain of 1.8% in nickel. Lead rallied 1%, zinc advanced 0.5%, aluminium and tin rose 0.4%.

The ferrous complex ticked down across the board. Coke dropped 2.5%, hot-rolled coil fell 1%, coking coal shed 0.9%, rebar declined 0.7% and iron ore lost 0.2%.

Copper: The most active SHFE September contract climbed during the day, recovering from overnight losses to close the trading day 0.45% lower at 46,080 yuan/mt. SHFE copper hovered at lows, as investors awaited comments from US Federal Reserve Chairman Jerome Powell for possible clues on the central bank’s next move on interest rates. Disappointing China producer price inflation and global growth concerns will dampen risk appetite and weigh on copper prices. In view of bearish technical indicators, whether the SHFE 1909 contract could stand firmly above 45,800 yuan/mt is crucial to watch tonight.

Aluminium: The most liquid SHFE August contract advanced 0.44% to close at 13,815 yuan/mt, near the intraday high of 13,820 yuan/mt and the 20-day moving average. Short-term longs added their positions on the news of the shutdown of Bosnia’s sole aluminum smelter, resulting in the gains in SHFE aluminium on the day. SHFE aluminium is expected to pull back on Thursday, when SMM is likely to report a smaller weekly decline in social inventories of primary aluminium ingots.

Zinc: The most active SHFE September contract rebounded from earlier lows to finish the trading day 0.47% higher at 19,180 yuan/mt. Traders moved their positions to forward contracts, with open interest for the July, August and September contracts shrinking more than 40,000 lots. The narrow spreads between the nearby-month and forward contracts showed weaker consumption. This, together with strong resistance from the five-day moving average, is expected to keep the contract rangebound around the five-day moving average tonight.

Nickel: As longs aggressively loaded up their positions, the most liquid SHFE September contract climbed to a three-month high of 103,450 yuan/mt before it eased to end 1.8% higher at 102,180 yuan/mt. This helped it stand above the upper Bollinger band. A total of 444 million yuan flowed into the SHFE nickel complex on the day, the most among nonferrous metals. The contract is expected to trade rangebound tonight.

Lead: The most traded SHFE August contract came off from a two-month high of 16,450 yuan/mt to close the trading day 0.98% higher at 15,995 yuan/mt, recovering from losses in the previous day. It is expected to hover around 16,000 yuan/mt tonight as investors have covered short positions that were added in the previous three trading days.

Tin: The most active SHFE September contract extended overnight growth to an intraday high of 136,950 yuan/mt before it erased some gains to close the trading day 0.42% higher at 136,560 yuan/mt. The unwinding of short positions accounted for today’s gains. Resistance is seen from the 10-day moving average as high as 137,500 yuan/mt, while support is at 135,000 yuan/mt.