SMM Evening Comments (Oct 16)

SHANGHAI, Oct 16 (SMM) – SHFE nonferrous metals closed mixed on Wednesday October 16 with tin as the best performer, ending up 1.34%. Aluminium climbed 0.62%, lead advanced 0.45%, while copper shed 0.4%, zinc fell 0.42%, and nickel slipped 0.96%. 

The ferrous composite fell further as iron ore slumped 3.22%, rebar lost 1.44%, hot-rolled coil dipped 0.93%, stainless steel slid 0.26%, and coke fell 0.78%. 

Copper: The most-liquid SHFE December contract traded with limited upward momentum today as International Monetary Fund slashed global growth forecast to 3% this year, the slowest rate since the financial crisis, which dimmed demand outlook for the industrial metal. The contract trimmed gains from the previous session and finished 0.4% lower on the day at 46,750 yuan/mt. As the MACD green line continued to lengthen, the contract may test support from 46,700 yuan/mt tonight. 

Aluminium: The most-active SHFE December contract continued its rally that began on Monday as bearish sentiment eased after previous consecutive days of decline. It rose to an intraday high of 13,840 yuan/mt and ended up 0.62% on the day at 13,855 yuan/mt. Longs added their positions on stabilised consumption and lower inventories, lifting open interest by 13,652 lots to 237,442 lots. However, lower costs and supply recovery, in the long run, may cap the upside room in prices. 

Nickel: The most-traded SHFE December contract fell for the fourth straight session as pressure above kept it below 133,000 yuan/mt, ending it 0.96% lower on the day at 132,500 yuan/mt. It drifted away from several moving averages above and failed to find support below. Tonight, the 132,000 yuan/mt level will be watched.  

Lead: The most-traded SHFE November contract recovered losses from the previous sessions and returned above the 60-day moving average, hitting a high of 16,970 yuan/mt before closing up 0.45% at 16,895 yuan/mt. However, we still see downward potential for the contract as support below remained weak. 

Tin: A buildup of bullish positions bolstered the most-liquid SHFE January 2020 contract to an intraday high of 139,100 yuan/mt, right after it opened at 138,120 yuan/mt. It consolidated at highs and closed the session at 138,790 yuan/mt, up 1.34% on the day. Pressure above is seen from 140,000 yuan/mt tonight.