SMM Evening Comments (Oct 10)

SHANGHAI, Oct 10 (SMM) – SHFE nonferrous metals ended mostly higher on Thursday October 10 with zinc as the best performer, rising 0.86%. Copper advanced 0.06%, nickel climbed 0.26%, tin increased 0.21%, while aluminium lost 0.36%, and lead shed 0.5%. 

The ferrous composite traded mixed as iron ore rebounded 1.08%, rebar gained 0.12%, stainless steel ended up 0.64%, while hot-rolled coil fell 0.35%, and coke dipped 0.21%. 

Copper: Prices of copper edged up and returned back to 46,700 yuan/mt on a softened US dollar after Federal Reserve officials showed more worries about the US economy according to minutes of the central bank’s meeting released Wednesday. The most-traded SHFE December contract closed up 0.06% at 46,700 yuan/mt, with open interest rising 11,000 lots to 211,000 lots as longs entered. The market continued to watch developments in the US-China trade talks as ministerial-level officials of the two countries resumed trade discussions on October 10. Without support from all moving averages, the contract may try to hold firm at 46,700 yuan/mt tonight. 
 
Zinc: The most-liquid SHFE November contract pared some overnight gains and unsuccessfully tested pressure above from the Bollinger middle band, before it found support from the daily moving average, rising to a high of 18,855 yuan/mt and ending up 0.86% at 18,850 yuan/mt. The contango structure intensified as discounts of the October contract against the November contract expanded to 50 yuan/mt by Thursday’s close, from the previous 10 yuan/mt. As departing shorts accounted for the rise today, a lack of confidence in longs may provide limited upward momentum to the November contract tonight. 

Nickel: The most-traded SHFE December contract regained losses from overnight and ended up 0.26% at 137,210 yuan/mt. It hovered in a narrow band around the 137,000 yuan/mt for most of the day, with heavy pressure from the five-day moving average. Tonight, the contract may continue to test resistance from the five- and 10- day moving averages. 

Lead: The most-liquid SHFE November contract stemmed decline from the previous session as it consolidated around the daily moving average today. It still ended 0.5% lower on the day at 16,950 yuan/mt, with pressure from 17,000 yuan/mt. Expectations of oversupply in the spot market may keep the contract below the 17,000 yuan/mt level tonight. Support is seen from the 10-day moving average. 
 
Tin: The most-traded SHFE January 2020 contract recovered swiftly after touched an intraday low of 135,350 yuan/mt in early trades. It closed 0.21% higher on the day at 136,670 yuan/mt. Support below is expected at 135,000 yuan/mt, with pressure above at 137,800 yuan/mt.